In 2024, troubled multifamily properties are primed to cause a significant increase in heartburn. The lion’s share of the struggles loom for value-add investors who took out floating-rate loans over the last few years but whose projects are falling well short of financial projections. In many cases, the investors overpaid for the assets, counting on continued robust rent growth and historically low interest rates to fuel returns.
But the benchmark Secured Overnight Financing Rate spiked from near zero to around 5.3 percent over the last two years. Higher property taxes and construction and insurance costs, along with a surge in new supply and more modest rent growth, have further compounded difficulties.
Source: More Distress Looms in Multifamily Finance. Here’s Why. – Multi-Housing News
