DFW properties on CMBS watchlist spikes

Commercial properties in the Dallas-Fort Worth region on lender watch lists have shot up by 33 percent since the start of the year, mostly stemming from the multifamily sector.

A study by Steve Triolet of Partners Real Estate’s Dallas branch revealed that 113 of 450 commercial properties appeared on the commercial mortgage backed securities loan watchlist, meaning they have an upcoming maturity date, a major tenant moving out or another situation that calls for heightened attention, the Dallas Business Journal reported. 

Retail came in second on the list with 98 flagged properties, followed by 69 for hospitality, 60 for industrial and 55 for office. As debt rates continue to climb and the banking industry is in flux, those figures are expected to climb.

“The uncertainty of the banks is making any refinancing of debt more problematic,” Triolet told the outlet. “So when you already have these properties that are subpar — particularly when I’m talking about Class C multifamily – it makes the owners and the banks nervous. The lender wants more money. They want the owners to put more cash into the property.”

While there are some causes for concern, the watchlist doesn’t necessarily mean these properties are on the brink of foreclosure or delinquency. It simply means they’re undergoing a change or a significant event is coming up.

Triolet added that 57 of the 113 multifamily properties are labeled as Class C — older buildings with higher vacancy rates, fewer amenities and less cash flow than its Class A and B counterparts. 

Some local developers have a knack for turning these Class C buildings into flashy, sought-after real estate. Dallas-based Steve Wood has plans to redevelop the Havenhurst Apartments into an upscale residential complex with 296 units. 

—Quinn Donoghue