While most U.S. market-rate multifamily loans have strong credit metrics, a significant portion show signs of financial stress that could increase default risk, according to a new Yardi Matrix bulletin.
Nearly $250 billion in multifamily loans are scheduled to mature through 2028, including approximately $230 billion backed by market-rate properties. The remaining debt is secured by fully affordable housing properties.
About 8 percent of loans in the Yardi Matrix database, which tracks $1.4 trillion in multifamily debt, have debt-service coverage ratios (DSCRs) of 0.6 or less, along with high loan-to-value ratios.
A DSCR below 1.0 indicates that a property’s net operating income is insufficient to cover its debt payments. Properties financed when interest rates were lower may struggle to refinance their outstanding loan balances at current rates, potentially requiring borrowers to contribute additional equity, negotia
