Quality of new loans on apartment buildings drops nationwide

TRD New York /
Aug.August 19, 2011 10:04 AM

The quality of new loans on U.S. apartment properties declined in the second quarter, putting multifamily properties at a larger risk of price decreases should rent growth stall, Bloomberg News reported, citing a study by Chandan Economics. The ratio of rental income to loan balances on high-rise apartments fell to 8.7 percent from 9.7 percent a year earlier, Chandan Economics said.

“In effect, apartment and office borrowers are encumbered with more debt for every dollar of cash flow their properties produce, heightening downside risks should property values adjust or cash flow decline,” Sam Chandan, founder of the New York-based Chandan, said.

In major cities such as New York, Washington and San Francisco, where property prices have improved the most, apartment debt yields fell to 7.5 percent in the second quarter from 8.6 percent in the same period a year earlier.

Debt yields on office buildings fell to 9.7 percent from 9.8 percent in the first quarter and 12.1 percent a year earlier. In New York, they dropped to 7.8 percent from 8.1 percent in the prior quarter and 10.3 percent a year earlier. [Bloomberg]


Related Articles

arrow_forward_ios
(Image by Wolfgang & Hite via Dezeen)

Hudson Yards megadevelopment inspires a new line of sex toys

Hudson Yards megadevelopment inspires a new line of sex toys
Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio
Wendy Silverstein (Credit: Getty Images)

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out
SL Green CEO Marc Holliday with 410 Tenth Avenue, One Vanderbilt and 126 Nassau Street (SL Green, Google Maps, Wikimedia, iStock)

SL Green’s lament: Office comeback “always right around the corner”

SL Green’s lament: Office comeback “always right around the corner”
Howard Hughes’ Saul Scherl and a rendering of 250 Water Street (Getty, The Howard Hughes Corporation/SOM)

Howard Hughes to launch review process for $1.4B Seaport tower

Howard Hughes to launch review process for $1.4B Seaport tower
Paul Singer of Elliott Management (Getty; iStock)

Billionaire Paul Singer’s hedge fund dumps NYC for West Palm Beach

Billionaire Paul Singer’s hedge fund dumps NYC for West Palm Beach
Mayor Bill De Blasio and HPD Commissioner Louise Carroll (Getty; HPD; iStock)

De Blasio restores $466M to housing capital budget

De Blasio restores $466M to housing capital budget
Taking it on the chin: Floyd Mayweather Jr. sells Miami Beach home at a loss

Taking it on the chin: Floyd Mayweather Jr. sells Miami Beach home at a loss

Taking it on the chin: Floyd Mayweather Jr. sells Miami Beach home at a loss
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...