''MSCI data suggests that multifamily could represent a larger financial burden than office as the Wall Street Journal reported. At the end of the second quarter, more than $40 billion in office loans were distressed. However, $80.95 billion in multifamily mortgages are at risk of distress — either because of falling occupancy rates or low debt-service coverage ratios — compared to $66.87 billion in office loans. The Journal called CRE CLOs as "one of the rockiest corners" of financing and a "niche product that apartment flippers gorged on during the pandemic." They pointed to data from CRED iQ. The data came from a July report of the firm. The numbers represent the entire financing category, not multifamily alone. The distress rate of CRE CLOs rose to 10.3% in June 2024. That was a 60-basis-point increase from the previous month and included any loan that was 30 days delinquent, past maturity, or specially serviced. What makes them dangerous is that they are floating-rate loans that have seen big declines in debt service coverage ratios. About 78.4% had an operating DSCR lower than the one listed in their underwriting, and 62% of all CRE CLOs had a DSCR below 1.00. Even factoring out current interest rates, which are likely higher than when the loan was first made, and 46.4% had net operating income below the underwriting assumptions.'' https://lnkd.in/e4B5kTrm