Well, better late than never. I have to apologize for the tardiness in publishing the multifamily reports (Multifamily REO, Multifamily Non Performing Loans) from Q2. We got into a number of upgrades and changes over here and these reports fell by the way side. The good news is conditions seem to be improving significantly for the apartment portfolios at the nation’s banks.
Whenever we look at the portfolio totals for a region or for the US I like to look at the pipeline. Meaning 30-89 day late, 90+ day late, Non accrual, and REO. Assets move through these stages of default in that order. Sometimes, obviously, loans are picked off by investors on their way to REO or occasionally loans are paid off but the above is essentially the funnel.
This past reporting period shows that multifamily loans reported as 30-89 days late dropped by a whopping 26.9%. That is a huge percentage considering that these are aggregate numbers from thousands of banks.
Banks booked in an extra 7.8% in MF REO, about $181MM, over the second quarter which shows that there’s a willingness to pull the trigger on some of the more delinquent borrowers. Nonaccrual (non performing, more than 90 days late) loans still stand at more than twice the volume of multifamily REO but as we saw in the residential report these are actually pretty good numbers (if you’re a bank).
Over the last 4 quarters distressed multifamily numbers have been trending down. Over the last two months I have had a couple of subscribers as well as local investors tell me that they are seeing more transactions and that banks are more willing to sell. This evidence is of course anecdotal but combined with the continuously improving reports I think it is safe to say that multifamily is finding it’s way right out of the woods. Numbers point to this being the first property type to truly turnaround.
Is apartment pricing going up in your area?
Have lenders made up capital available for acquisitions?
I’d love to hear your experiences in the comments.