Multifamily real estate continues to take a beating this summer

This summer is shaping up to be one of the hottest on record, but there’s a cold front hammering multifamily real estate.

Earlier this week, in response to The Real Deal, which pointed out in an article that Rise48 Equity was vulnerable to distress in the multifamily sector, its founder Zach Haptonstall recorded a 16-minute video telling investors, “We are not distressed” seven times. 

But Morningstar data show revenue at Rise48 properties covered only half of debt payments, at the median, and renovations at one property in need of upgrades to boost rental income had been delayed.

Based on the online reactions, the video didn’t sway too many people.

“Who advised them to respond?” wrote one reader on investment banking site Wall Street Oasis. “These guys have multiple loans on watchlists right now… I want those 16min back.”

Another syndicator, Tides Equities, has also been feeling the crunch, but may have found a lifeline with AMC.

The firm is putting up a hefty bet of $322 million on Tides through deals over the last five years and buying equity positions in 45 of the syndicator’s multifamily acquisitions — which works out to more than 10,000 units, as of December, according to investment documents written by AMC and obtained by TRD. 

On AMC’s website last month, the firm listed 51 properties linked to Tides, but has since removed all references to the company.

None of the properties AMC has invested in are on servicer watchlists, according to a TRD analysis of Morningstar Credit data. But last month, Tides sent a letter to investors telling them it faces cash issues and they should expect cash calls in the future. Given the firm often used floating-rate loans for acquisitions, its debt payments on the properties have soared.

The brutal summer is taking its toll on other players as well, including major players like Related Companies and Blackstone.

Indeed, Related’s residential projects may have scored some recent deals in Hudson Yards, but with heavy discounts; a load of inventory lies underneath the successes in the Far West Side megadevelopment. 

The developer’s sluggish residential sales at the condo towers at 15 and 35 Hudson Yards  have left the company with more than $1 billion of condos left to sell, according to analysis by The Wall Street Journal. 

Luxury residential tower 35 Hudson Yards still counts roughly 50 percent of units unsold, more than four years after sales launched. 

Blackstone listing

Meanwhile, on the industrial side, Blackstone, has listed through its Link Logistics subsidiary a large industrial portfolio with JLL. The six properties in the package — five buildings and one infill parking lot — are in and around New York City, with two near La Guardia Airport, two on Long Island, one near JFK Airport and one in Inwood.

According to the listing, the portfolio totals 929,000 square feet and is fully leased, with one tenant on each property. The weighted average remaining lease term is a little over six years.