Multifamily Comprises 80% of CRE CLO Collateral in Recent Deals

A handful of the latest commercial real estate collateralized loan obligation (CLO) deals lean hard into multifamily collateral and full-term interest-only structures. CRED iQ analyzed loan-level collateral across a handful of the latest CRE CLO deals totaling $4.68 billion and 160 loans of collateral with the profile pointing to lenders concentrating risk in the sectors and structures they trust most in a higher-rate environment.

Apartment collateral makes up 79.8 percent of aggregate balance in the sample, followed by hospitality at 8.1 percent and industrial at 5.2 percent. Office, retail and health care each account for roughly 1 percent or less. The concentration confirms that CRE CLO issuers remain committed to transitional multifamily lending even as other property types stay largely on the sidelines.

Interest-only (IO) terms are nearly universal. Full-term IO loans represent 95 percent of collateral balance, with the small remainder carrying partial IO or amortization. The structure preserves borrower cash flow as business plans are executed, but it also means principal paydown is minimal until maturity, keeping refinancing pressure front and center. The sampled pools carry a weighted-average spread of 303 basis points over the Secured Oversight Financing Rate and a weighted-average coupon near 6.68 percent. 

These deals point to a familiar core: multifamily assets, floating-rate coupons, and IO structures that maximize early cash flow. Future funding commitments total $244 million across these deals, signaling continued appetite to finance value-add and lease-up business plans. Geographic exposure skews toward New York, Florida and Texas, which together account for more than 43 percent of balance.

For investors, the takeaway is concentration. These deals offer exposure to a tightly defined slice of the market, and the reliance on full-term IO means credit performance will hinge on borrowers refinancing or selling at maturity rather than de-leveraging along the way.

Mike Haas is the founder and CEO of CRED iQ.