Commercial Loans and Fun Blog

The Very Scary Bear Case For Multifamily and Apartment Loans

Posted by George Blackburne on Sat, Feb 17, 2024

I didn't write this article.  I found it on LinkedIn, and I am reposting it here, with the author's permission.

It took me a really long time to truly understand liquidity when it comes to investments. It's not just about cash balances in the bank, but about the ability and willingness to transact.

According to MSCI, apartment/multifamily sales volume fell to $119 billion last year, a 61% drop from 2022. That shows a lack of liquidity in a market which recently saw as much as $300B of volume in 2021/22.


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To put that into perspective, the coming maturity wall (which has gotten worse with extensions, by the way) is up to over $900B. Let's assume that multifamily makes up the same % of this volume as it does CMBS, which is about 35% (this would be a hypothetical assumption in an appraisal). That would mean ~$315B of multifamily loans are to mature in 2024, and assuming a 65% LTV, that's about $450B in estimated value of multifamily assets maturing.

Right now, cap rates AND interest rates are significantly higher than they were for nearly all of these maturing loans at origination, and many do not qualify for a new loan at "market" terms. If only 50% of that maturing loan volume needs to trade via sale, that would mean that transaction volumes would need to double in 2024 to work through the backlog, without even accounting for everyday sales like those caused by 1031, death, divorce, or disaster.

When you have a rush of inventory and folks looking for the exit, that's when prices really drop due to lack of liquidity. I think that this is the single biggest risk in CRE today, especially given the new data on 2024 maturities increasing nearly 50%. I am not personally confident that cap rates and interest rates can or will drop in time to avoid this type of outcome.


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How can an asset owner avoid being burned by this? Buy cash flowing assets from day 1 (hard in this environment), don't take on maximum leverage, and build or maintain cash reserves that would enable you to refinance at current market interest rates and leverage. It may not be the most efficient way to run a business, but being in real estate investing is not a finite game.

Written by Dillon Freeman, LBC Capital - 818-648-9470

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You need to follow me on LinkedIn.  I am posting important news daily.  I posted this yesterday:

Russia may have placed nuclear EMP devices in space over the U.S. If exploded 75 miles above, almost every electric device in the country would be fried. Most of us would die in 18 months from starvation, disease, and crime.  Our National Security Advisor is... "quite concerned."  (Folks, he is freaking out.)


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Topics: apartment loans

Multifamily Loans and Tuck Under Parking

Posted by George Blackburne on Mon, Jul 17, 2017

Fannie Mae and Freddie Mac Will Not Lend on Apartments with Tuck-Under Parking

The conduits are making are making CMBS loans again, and the most preferred product is multifamily loans.  The problem is that the agencies - Fannie Mae and Freddie Mac - have better rates and terms for apartment loans than the conduits.  The agencies will also go higher in terms of loan-to-value.

The conduits are therefore looking for scratch and dent apartment loans that don't quite qualify for the agencies.  One reason an apartment building might not qualify is that it cannot satisfy the 90/90 Rule.  Fannie and Freddie will not finance an apartment building that has not been at least 90% occupied for ninety days.

Another fatal flaw for Fannie and Freddie is tuck-under parking.  Tuck-under parking is basically carports underneath the building.  The concern is that the building could collapse in an earthquake. 

Tuck Under Parking
Image of tuck-under parking

Although the agencies won't finance properties with tuck-under parking, CMBS lenders will gladly make these loans.  If your apartment building is also struggling to maintain 90% occupancy, you should consider a conduit loan.

Do you need a conduit loan right now?  You can apply to several dozen conduit lenders in just four minutes using  And C-Loans is free!


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You can also write to me, George Blackburne, at  Simply insert the words, Conduit Apartment Loan Request, in the subject line of your email.

Topics: apartment loans, multifamily loans

Blackburne & Sons Introduces a Great New Apartment Loan Program

Posted by George Blackburne on Wed, Jan 15, 2014

Man, oh man, do we ever have a great new apartment loan program for you!  There is a little-known institutional investor out there that has an almost insatiable appetite for apartment loans.  Last year they originated and/or purchased over $380 million in apartment permanent loans, making them one of the largest players in the multifamily financing market.

describe the imageBecause we have been in the commercial mortgage loan business for over 33 years, and because we own, Blackburne & Sons just got approved to originate and sell apartment loans to this investor.  These apartment loans actually close in our name, but they are quickly sold off to our institutional investor.  The vetting process took over six months to complete, but we are now one of only six mortgage banking firms in the entire country allowed to originate loans for this investor in our own name.

Okay, here's the deal.  These are all 30-year fully-amortized loans.  Your client has a choice of an ARM tied to 6-month LIBOR, a three-year hybrid, a five-year hybrid, a seven-year hybrid, or a ten-year hybrid.  By far the most popular choice is the five-year hybrid.

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The interest rate is incredibly low, starting as low as 3.87% for a purchase money, 5-year hybrid in a Tier I market.  Properties in less-populated and/or less-desirable areas - known as Tier II and Tier III markets - have slightly higher interest rates.

The ARM program and the hybrid programs, after the initial fixed rate period, are tied to six-month LIBOR, with a 3.5% interest rate floor, a ceiling of 6% over the start rate.  On the hybrid loans, there is no periodic rate increase cap on the initial rate readjustment, immediately after the fixed rate period.  After the first rate readjustment, there is a 1% rate readjustment cap every six months.  This loan has no negative amortization.

This program can be used for apartment loans as small as $300,000 to as large as $20 million.  Apartment loans smaller than $1.5 million have slightly higher interest rates, but the interest rate is still very, very attractive. 

The loan-to-value ratio is between 75% and 60%, depending on the property's quality, age, and location, and whether the loan is a purchase-money loan, a rate-and-term refinance, or a cash-out refinance.  Your Blackburne & Sons loan officer can work with you to quickly make this determination.

In addition to apartments, this program can aslo be used for 4-star and 5-star mobile home parks (no single-wide coaches), mixed use properties (maximum of 40% commercial), student housing, and, surprisingly, low-income housing.  Caution:  Low-income housing deals are valued based on the lower rents typically found in nearby middle-income areas, so the maximum loan amount is often lower than expected.

Personal guarantees are required from Managing Members, General Partners, coporate officers, and individuals owning 20% or more of the property.

Loans to foreign nationals are available, up to 50% loan-to-value. 

We recommend that you quote your borrower the following:

Interest rate: 5.10%  (Assumes an average building in a Tier II market)

Loan Fee: 1 point  (Brokers add their fee on top)

Amortization / Term: 30/30

Prepayment Penalty: 5,4,3,2,1

Please gather for your Blackburne & Sons loan officer:

  1. Color photo's of the property
  2. Rent Roll
  3. Last two years' actual income and expenses.
  4. Financial statement on the borrower.
But before you do anything else, we recommend that you first call your Blackburne & Sons loan officer, or Tom Blackburne at 574-210-6686.

Topics: apartment loans