Shafiq Hirani warns that CMBS distress hit 7.86% in July, with $65 billion in loans maturing by year-end. Lenders now underwrite based on current NOI, not future cap rates, so owners must protect today's income through tenant retention and operational efficiency rather than cutting rents.
Quickly, because it connects. Trepp reported the CMBS distress rate jumped to 7.86% in July. Roughly $65 billion in loans mature by year-end, and more than half of those properties will need fresh borrower equity to refinance. Office is the epicenter at nearly 12% distress. But here is the line every apartment owner should hear: lenders are sizing loans around current property income, Instead of betting on future cap rate compression. That is the whole message of this channel in one sentence, coming from the lending market itself. Nobody is going to give you credit for what your building might earn later. They are lending against what it earns today. That is why work on your NOI is no longer optional. Quick example: Marcus owns a 12-unit building. When new construction opened nearby with concessions, His instinct was to cut rents to compete. Instead, we focused on retention and turn efficiency, fixing the maintenance issues driving tenants out, tightening turn times, and timing renewals thoughtfully. He held occupancy without a race to the bottom on price, and his NOI held with it. Here is what I would do this week. 3 things. 1, pull your own vacancy and turnover numbers for the last 12 months. and compare them to your direct competitors, not to the national rate. That is the only benchmark that means anything. Download my free NOI Leak Audit Checklist. When leasing is competitive, protecting the income you have matters more than chasing new income. Link in the description. If you are 6 to 24 months from a refinance or sale, book a free 15-minute NOI diagnostic with me. Lenders are underwriting today's income; let's make sure yours tells the strongest story it can.
