Sam Tenenbaum, Director, Multifamily Insights at Cushman & Wakefield, shares some interesting data on multifamily debt maturities:
In each year from 2022-2029, more than $100B in debt matures, except for the year 2027 when $98B comes due. For context, in 2021 about $75B came due. This is the highest figure recorded in history, so every year through 2029 is scheduled to surpass the all-time high mark.
Why is this a concern?
For much of the past decade, new debt was almost always accretive to the deal – in an era of low rates and compressing cap rates, increasing competition from lenders drove the cost of debt lower, allowing owners and buyers to boost returns by adding lower-cost debt.
With the rate environment changing as quickly as it has, this new debt is likely to be more expensive than existing debt, potentially forcing more owners to take their property to market and certainly making it more difficult for owners to refinance.
It may also become a source of distress in the market as owners who purchased during the peak of the market over the past few years struggle when buyers won’t be able to underwrite the seller’s required exit price.