MBA CREF 2025: Multifamily Challenges, Senior Housing Opportunities Dominate Day 2

It was a bit cooler on day two of the 2025 Mortgage Bankers Association’s Commercial/Multifamily Finance convention in Downtown San Diego, but no less active. Market participants crowded the halls of the Manchester Grand Hyatt hotel to discuss an uncertain bond market, challenges impacting multifamily, commercial mortgage-backed securities (CMBS) concerns and the current opportunity for investors across senior and affordable housing.  

Tuesday’s events opened with a discussion among three top originations and brokerage executives: Jeffrey Majewski, executive managing director, CBRE Capital Markets; Hilary Provinse, executive vice president of capital markets at Berkadia; and Wally Reid, senior managing director of JLL Capital Markets. 

The trio largely agreed that 2024 was a tale of two completely different halves, with the Federal Reserve‘s interest rate declines in August and September spurring borrowers to lock in business at the first hint of an easier rate environment, even as the November election cast some uncertainty over which market borrowers would be locking into. 

“When we saw interest rate plummet in August, we probably locked 50 percent of our deals within four weeks,” said Provinse “There was a lot just happening all at once that we had to manage, and it ended up being a great year, but it was a bumpy ride.”

JLL’s Reid emphasized there is a concrete need for stability in 2025 across the industry. He noted that institutions and investors have a bounty of capital sitting on the sidelines, but market participants “need to know what will happen next” before they can begin closing transactions, particularly acquisitions.  

“If we get some stability in the 10-Year Treasury, then it’s off to the races, I hope,” he said. “And I’m not saying 4 percent [yields], I’m not saying 5 percent [yields], we just need some stability, not where it is.” 

Reid added that 70 percent of JLL’s business last year was industrial and multifamily, while only 8 percent was office, with the rest filled out by hospitality, storage and retail. His best guess is that “retail is the darling of 2025,” because “cap rates will come down, there’s too much money raised around it, and yields are way out of whack.” 

CBRE’s Majewski agreed with those sentiments, and added that amid greater stability, he expects to see “some pretty big office trades this year,” so long as the first few clear the market to generate a baseline floor for acquisition financing to take off. 

“We all have very strong sales practices, and strong debt practices, and we try to connect the dots with them as much as possible, but we have to get that acquisition financing back,” he said. “We believe we will see much more sales activity, and deals clearing the market [in 2025].” 

Beyond increased interest rate stability and greater acquisition transaction activity, Reid noted that the banking system is rebounding, as well. JLL’s regional bank business is up to 37 percent in early 2025, compared to 20 percent in 2024, mainly due to a plethora of three-year, fixed-rate loans.  

“Our smaller bank business is up significantly,” he said. “It’s mostly smaller regional banks that have less reserves now, because of the housing change, and they’ve done their balance sheets [right], and are super competitive on the five-year money. I don’t know the names of these banks, we did deals with 187 banks last year, but the banks are back.” 

The panel concluded with all three participants agreeing that lenders have collectively had enough of the “extend and pretend” strategy of loan modification, which is likely to bring bridge lenders, and their preferred equity and mezzanine debt, back into the capital markets in a big way in 2025. 

Berkadia’s Provinse highlighted “bridge-to-bridge” as the likely remedy for the $959 billion wall of CRE maturities coming due this year, as well as for many underwater construction loans.  

“We’re taking bridge loans from 2021 out, borrowers are putting a little bit of equity in, or restructuring the deal, and we’re putting on another three-year [floating-rate loan],” she explained. “These are still good deals, but people believe three years from now it will be easier to sell or put on more permanent financing.” 

The second panel of the day focused on the health of different asset classes, with an emphasis on distress in multifamily. 

Trepp’s Patricia Bradshaw opened the discussion by highlighting CMBS delinquency data, which has office facing an all-time high delinquency rate of 10.23 percent. Moreover, the multifamily sector has seen its CMBS delinquency rate rise from 2 percent in April 2024 to 4.6 percent in January 2025, according to Bradshaw.

“Multifamily financing is becoming harder because of interest rates, and the payments aren’t aligning,” she said. “In Trepp’s CRE commercial property database, we have over 5,000 multifamily properties nationwide that have a DSCR [debt service coverage ratio] of less than 1, just to give you some insight into the distress we’re seeing nationwide.” 

Overall, the CMBS delinquency rate stands at 6.56 percent across all asset classes, down significantly from its peak delinquency rate of 10.34 percent in July 2012, per Bradshaw. 

Sticking with the theme of multifamily sector difficulties, Pharrah Jackson, vice president of Greystone, called the uncertainty around interest rates and the second Trump administration, “huge challenges we’re facing.” But she turned the tables by lauding the resilience of the affordable housing sector, specifically the ways it can attract investor capital after being underserved by the public sector in recent decades. 

“There is one sector where there will always be demand, and that is affordable housing,” said Jackson. “There’s millions of units needed across the country, and I don’t think there’s a market in the country that has sufficient housing for affordable and still has a very high need for middle-income housing.”

Jackson tried to shoo away several misconceptions about affordable housing by humanizing the residents of the sector, pointing out that 80 percent of affordable housing tenants are working Americans, who hold jobs at McDonald’s, or are teachers, janitors and single-mother office workers, she said.  

“One of the issues with affordable housing is marketing — people hear affordable housing and think it’s poor people who don’t work,” she added. “It’s marketed so poorly … and it needs more support from our environment.”

Staying on the topic of multifamily, Stephanie Wiggins, head of production and agency lending at PGIM Real Estate, examined the headwinds the sector faces due to rising construction costs under the Trump tariff regime, which she said will make steel and lumber too expensive for many deals to pencil. She described what she called “an unusually tight labor market” as something that will impact not just multifamily construction, but also multifamily operators. 

But she crouched this dismay by emphasizing that multifamily continues to be the preferred asset class for investors, mainly due to the fundamentals coming out of the Midwest, the Northeast and the coastal markets, which she said currently have a slight edge over the Sun Belt and the mountain regions due to their excess supply metrics. 

However, Wiggins said the long-term trends favor the Sun Belt and the Mountain West when it comes to multifamily capital inflows. 

“The lower cost of living will drive migration to those areas,” she said. “The quality of life, the business and tax-friendly environment, coupled with less barrier for entry into development, will have those two regions seeing more multifamily investment than others.”  

Joe Pella, head of national real estate at Truist, offered his two cents on the lasting power of multifamily for investors by highlighting the subsectors within the asset class, notably the build-to-rent (BTR) space. Pella pointed out that supply for single-family-houses is at an all-time low, mortgage rates sit at 7 percent, and movement for sellers and buyers is restricted — a perfect recipe for new renters.    

“The BTR space was a fad and a really flashy topic for a while, but it has a piece of the housing cycle and it has some staying power, for sure,” he said. 

PGIM’s Wiggins closed the discussion by zeroing in on the remarkable demographic transformation occurring in the aging baby boom generation, and just how much the “silver tsunami,” as she called it, will impact the senior housing space and its various sub-asset classes. She noted that not all seniors are alike, as some require assisted care, while others look for living quarters carrying amenities and community benefits.  

“The aging population is definitely going to be driving demand for different types of multifamily in both urban and suburban markets,” she said. “Definitely look for a shift in the demand for senior housing, single-story homes, assisted living, retirement communities, especially those that have continuum of care. 

Perhaps anticipating Wiggins’s focus on senior housing, the final panel of the day put an emphasis on health care lending and the dueling opportunities and challenges across senior living spaces. 

Since 2000, the population that is 85 or older has grown by 55 percent, but skilled nursing beds have declined by 11 percent, according to CBRE data. 

J.P. LoMonaco, executive vice president at CBRE, said that while the number of skilled nursing facilities across the population has decreased, even as the elderly population increases, the industry as a whole is healthy due to changes in the way the facilities choose which patients to admit. 

“The industry is healthy because they’re taking care of more acute residents: revenues are going up and they are seeing sicker patients today,” he said. “It’s often said the assisted living resident of today was the nursing home patient 25 years ago.”

LoManaco added that the senior space just isn’t what it used to be. He listed how the “active adult living sector” is much more popular among seniors, as its communities are not staffed, hold limited meal service, and carry “a country club feel.” 

“Independent living has become more attractive because technology has allowed seniors to stay in place without 24-hour supervision,” he said, adding this spectrum of senior housing options will remain wide throughout the aging of America this century. “To be honest, senior housing [alone] won’t be able to handle the baby boom  — it will come from home health, technology, and a little bit of everything.”

Investors in the public and private sector are ready to pounce on the increased needs — and capital — across senior housing. 

Doug Harper, managing director at Lument, went over a chart that showed the senior housing saw a record volume of 429 mergers and acquisitions deals in 2024, with 20 percent of those deals distressed acquisitions. Harper listed health care REITs like Welltower, Ventas, Omega and CareTrust as the biggest players in the acquisitions space. 

He noted inflationary measures and construction costs has led the largest REITs to prioritize buying up competitors outright to acquire existing senior housing, which he called “the big theme” in the market. 

“We’re seeing a lot more people decide to buy,” he said. “That’s a cheaper way to make the numbers work, so now they’re trying to find the right property in the right market, and I think that’s been a big driver for our senior M&A uptick that will continue.”

Brian Pascus can be reached at bpascus@commercialobserver.com