Apartment Owners Face Refinancing Squeeze As $297,000,000 Billion In Debt Comes Due

Hundreds of billions of dollars in apartment debt is coming due as property owners confront higher borrowing costs, weaker rents in some markets and refinancing terms that could force borrowers to inject fresh cash or sell.

Roughly $297 billion in multifamily mortgages are scheduled to mature in 2026, representing about 13% of the $2.3 trillion in multifamily loans tracked by the Mortgage Bankers Association. Another $223 billion comes due in 2027, followed by roughly $237 billion in both 2028 and 2029.

The stakes extend beyond property owners. In markets where landlords cannot raise rents enough to offset higher financing and operating costs, the pressure could instead show up through weaker property cash flow, reduced spending on maintenance or renovations, property sales and, in some cases, delinquency.

The bigger concern, however, may not be the amount of debt maturing but whether apartment properties financed when rates were much lower can support the same amount of borrowing under current market conditions.

“From our perspective, the volume of multifamily debt coming due isn’t the core issue. The refinance gap is,” a Trepp spokesperson told the Daily Caller News Foundation in emailed comments. “Many owners who borrowed when rates were low can still cover their interest payments but can’t refinance at maturity without putting in significant new equity.”

The pressure is particularly concentrated among interest-only and floating-rate loans, according to Trepp. Multifamily commercial mortgage-backed securities (CMBS) delinquencies rose 46 basis points to 7.69% in July as loans in Ohio, Texas and New York became delinquent, according to a Trepp report.

Trepp separately reported that 30 multifamily CMBS loans totaling $509.3 million became newly delinquent during July. Ten loans totaling $214.1 million were backed by older Sun Belt properties, where declining occupancy contributed to stress.

Mortgage Bankers Association Chief Economist Mike Fratantoni told the DCNF that higher interest rates are only part of the challenge facing apartment owners.

“In addition [to] the challenge of higher interest rates, multifamily property owners also face challenging fundamentals with flat to declining effective rents in a number of markets, particularly in the sunbelt and elevated vacancy rates,” Fratantoni said. “At the same time, expenses including insurance costs are high. This pressure on NOI is reflected in lower property values relative to a few years ago.”