Kroll Bond Rating Agency (KBRA) today released a report summarizing its views on the CMBS Multifamily sector.

The multifamily sector has demonstrated solid fundamentals over the past few years. The sector has been aided by a decline in homeownership to a 48-year low during 3Q 2015 at 63.7%, which has contributed to increasing occupancy and rental rates. However, with low interest rates and rising valuations, credit standards have continued to ease as competition amongst loan originators progressed throughout the year. KLTVs finished off the year with an average of 104.9%, a full four points over last year, while KBRA’s IO Index climbed 2.2 points higher to end the year at 22.5%.

The multifamily sector should continue to perform well in 2016 and 2017, although oversupply is expected to begin pressuring rent and occupancy levels. It is hard to be as optimistic beyond that time frame as continued supply increases are likely to take a higher toll in 2018 and 2019 and competition to originate CRE loans continues. Of course, other factors that could weaken the multifamily market include rising interest rates, changes in government policies or possible recession.

To view the report, please use the following link:
www.krollbondratings.com/show_report/3577

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About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).