The loudest version of the apartment story right now is that multifamily credit is cracking. The data says something more specific, and a lot more useful for anyone who actually has to underwrite a building.
CRE Daily reported this week on Trepp’s August figures for securitized multifamily debt. Of roughly $635.8 billion outstanding, about $11.6 billion is delinquent. On its own, that is not a crisis. What matters is where the delinquency sits.
Freddie Mac holds about $519 billion of that debt, roughly 82 percent of the balance, and its delinquency rate is 0.80 percent. Private-label CMBS holds about $75.5 billion, 12 percent of the balance, and its delinquency rate is 7.69 percent. That small slice now carries about $5.8 billion of past due loans, or roughly half of every delinquent securitized apartment dollar.
Two years ago the picture looked different. According to Trepp, delinquent securitized apartment debt totaled $7.04 billion in August 2024, and CRE CLOs carried the largest share of it. Since then, the private-label delinquency rate has more than doubled, from 3.30 percent to 7.69 percent.
This Is the K in the Credit Stack
I keep coming back to the K shaped housing economy because it keeps showing up in places people do not expect. Here it is in the capital stack. The upper arm of the K is agency debt: fixed rate, conservatively sized, sitting on buildings with real cash flow. The lower arm is conduit and bridge style debt written near peak values, often on older buildings that cost more to run every year.
Trepp’s vintage data makes the point. Over two years, private-label exposure to pre-1980 buildings rose from $20.4 billion to $29.1 billion. CRE CLOs went the other way, cutting their pre-1980 exposure from $16.2 billion to $6.8 billion and shifting toward newer product. The oldest, hardest to operate apartments migrated into the bucket with the worst performance.
Read the Footnote
The CLO numbers look like a recovery. Their delinquency rate fell from 6.05 percent to 3.88 percent. But Trepp notes that CLO managers can remove defaulted or impaired loans from their pools. Some of that improvement is loans leaving the pool, not loans getting healed. Those assets did not disappear. They moved to a balance sheet, a workout, or a sale. Data over emotion means reading the footnote before you read the headline.
The broader backdrop is not getting easier. CRE Daily reported that the CMBS special servicing rate rose to 11.49 percent in September, the highest since 2013, with the 10 year Treasury sitting above 5 percent. Walker & Dunlop’s Willy Walker told the market that debt is plentiful and equity is scarce, with about $1.5 trillion of multifamily loans due to refinance over four years.
Where I See Opportunity
Concentrated distress is workable distress. When the problem sits in a defined pool of older buildings with identifiable maturities, it becomes a set of specific situations rather than a market wide panic. That favors operators who can actually run a 1970s garden complex: fix the deferred maintenance, tighten expenses, and keep it as workforce housing that people can afford. It favors patient equity and rescue capital that can fill the gap a refinance will not cover. And it favors agency lenders, who will take the good buildings out of troubled structures once they stabilize.
Supply helps the survivors. CRE Daily reported that Sun Belt apartment starts are down about 75 percent from their 2022 peak, and that several large metros could see their tightest conditions in years by 2028. Owners who can hold through 2027 may find a very different rent picture on the other side.
Where It Breaks Down
A distressed old building is not automatically a bargain. Insurance, taxes, and capital needs on pre-1980 stock can erase a low basis fast. The agency book is healthy, but its delinquency rate still rose from 0.48 percent to 0.80 percent in two years, so the upper arm of the K is not immune. And if more 2021 and 2022 vintage loans run into a 5 percent ten year, private-label delinquency may not have peaked.
What I Am Watching
Whether the private-label rate plateaus near 8 percent or keeps climbing. Whether Freddie Mac’s rate crosses 1 percent. How many impaired loans CLO managers keep pulling out of pools, and at what marks they trade. And whether note sales on older Class B and C apartments start clearing at prices that let a real operator make the numbers work.
If you are holding, lending against, or looking at an older apartment asset with a maturity coming, the right time to stress test the capital structure is before the servicer calls. That is the work we do at Kaufman Real Estate & Consulting through capital structure and feasibility reviews: https://www.kaufmanrealestateandconsulting.com
About the Author
I’m the founder and CEO of Kaufman & Company, a private investment and holding firm working across real estate development, venture investment, and infrastructure. My focus is workforce housing and employer-anchored development, including mountain resort communities through Oldivai.
Reach me at Daniel@kaufmanredev.com or find more at danielkaufmanre.com.
Sources
Multifamily Delinquency: Private-Label CMBS Holds Half, CRE Daily, October 16, 2026, https://www.credaily.com/briefs/multifamily-delinquency-private-label-cmbs-holds-half/
Power Access Overtakes Land and Labor in US Site Selection (National newsletter, Editor’s Picks and Multifamily sections), CRE Daily, October 15, 2026, https://www.credaily.com/newsletters/national/issue/power-access-overtakes-land-and-labor-in-us-site-selection/
Sun Belt Apartment Recovery Turns Sharply Uneven, CRE Daily, October 14, 2026, https://www.credaily.com/newsletters/national/issue/sun-belt-apartment-recovery-turns-sharply-uneven/