From boom to bust, multifamily distress surges nationwide; Fed’s rate cuts take shape... and more

The best national real estate stories from The Real Deal Aug 10, 2024 [View in Browser]( | [$1 for 1 Month]( [The Real Deal Logo](   [The National Logo](   In this week’s newsletter, we look into the rising tide of distress in the multifamily market and the challenges investors are facing. Plus, more agents leave Official amid sexual assault allegations against its co-founders, two rabbis square off over the YJP business network, and the Fed’s long-awaited rate cuts are finally taking shape. These stories and more below.   From boom to bust, multifamily distress surges nationwide The multifamily boom could be starting to bust. Investors across the country are scrambling to stay afloat as elevated interest rates, increased expenses and lack of rent growth lead to waves of distress. Previously a hotbed for multifamily investment, the Sun Belt has been riddled with foreclosures and delinquencies this year. Multifamily syndicators like Tides Equities, GVA Real Estate and Nitya Capital, who aggressively expanded their portfolios during the boom, are among the hardest hit. Just a few years ago, the recipe for syndicators seemed simple: pool equity to buy property, borrow at floating rates to acquire apartment buildings, renovate, raise rents, rake in cash. Sponsors’ reliance on commercial real estate collateralized loan obligations, or CRE CLOs, which are particularly vulnerable to rising interest rates, has proven to be a double-edged sword. From late 2020 to early 2022, borrowers tapped lenders for short-term floating-rate debt while it was cheap. Now, as these loans come due, they’re proving difficult to refinance, pushing many properties into distress. In June, Tides lost operational control of one of its largest Texas assets, [Tides on Copper Creek](, when it defaulted on a $103 million loan. The dominos kept falling from there as the Los Angeles-based firm lost apartment complexes in [Las Vegas]( and [Dallas-Fort Worth](. Alan Stalcup’s GVA [suffered losses]( throughout Texas and the Carolinas earlier this year. The surge in multifamily distress, which has nearly [tripled in the past six months](, is a stark indicator of the challenges facing investors and property owners across the country. Lakewood, New Jersey-based investor Yakov Stein faced [possible foreclosures]( in Atlanta in August. Even Goldman Sachs, along with Ballast Investments, handed the keys to [82 apartment buildings]( in San Francisco to their lenders in July after defaulting on loans totaling $687.5 million. Key lenders for syndicators are struggling as well. Ready Capital has [sold distressed debt]( for cents on the dollar, and Arbor Realty Trust reported [$1 billion in delinquencies]( in the second quarter. But investments above the Belt paint a different picture. Chicago investors have been testing the multifamily market as consistent rent growth and high demand draw interest from buyers, with San Francisco-based FPA Multifamily leading the charge, [snapping up apartments]( throughout the suburbs. New York City held strong with record-high rents over the last year, but its market is showing cracks. New York Community Bank reported that multifamily [delinquencies surged by 767]( percent from the previous quarter. Across South Florida, developers are building a [record number of multifamily units]( as the region’s leasing frenzy has slowed and unbridled rent growth has calmed. However, a Berkadia report predicts that leasing will catch up to the hefty supply. Many players are looking toward potential rate cuts for relief. Others are [adapting to the new landscape](. But while some see opportunities in the chaos, many are just trying to survive the storm. The big question now is who will sink and who will swim.   Together with Entrata Centralize with a flexible, customizable platform [Entrata]( You know your business better than anyone. That’s why Entrata has developed a centralization solution you can customize according to your business’ needs. Centralize the workflows that streamline your operations, reduce costs, and improve efficiency across your organization. No need to change anything that’s working well. With Entrata, you can run your properties with more efficiency, from site-level to C-level.   [I'm an image]( “The whole market is on the edge of its seat”: Residential real estate eyes long-awaited Fed cut The Federal Reserve’s long-awaited rate cuts are finally taking shape, joining a drop in mortgage rates to stoke expectations for more buyers to enter the market. [I'm an image]( Official exodus: Miami, New York agents depart brokerage tainted by allegations against co-founders Embattled brokerage Official is suffering more blows in the form of agent exits, this time in its home markets. [I'm an image]( Rabbi v. rabbi co-founders fight over control of YJP business network, building Behind the scenes of a nasty legal battle between Naftali Rotenstreich and Shaya Lesches   Advertisement   [I'm an image]( [Brand Studio Chicago’s Newest Luxury Tower Boasts Navy Pier Views from Chef’s Kitchens]( [I'm an image]( “Bloodbath of competition:” What could happen when Miami’s pipeline of condo-hotels is delivered Condo developers in Miami have re-discovered the condo-hotel, and buyers are eating it up. But they may be disappointed with their returns once their units are completed. [I'm an image]( Elliman eyes interest rate cut after narrowing losses in the second quarter Douglas Elliman didn’t quite make it into the black in the second quarter, but wound down its losses. [I'm an image]( Chetrit dishes dirty details of Parkhill City foreclosure in counterclaims When The Chetrit Group was hit with a foreclosure filing on its Jamaica, Queens, project, its lender painted a less than sympathetic picture of the borrower. [I'm an image]( Rich Barton out as Zillow CEO With a sixth consecutive quarterly loss in the books, Zillow is swapping out its CEO.     [The Real Deal Logo]( [Facebook]( [Twitter]( [Instagram]( [LinkedIn]( [YouTube]( [Manage Newsletters]( | [Unsubscribe]( | [Privacy Policy]( | [Subscribe]( | [Advertise]( The Real Deal 450 West 31st Street, New York, NY 10001 ©2024 TheRealDeal. All rights reserved. [View Online](