The situation for multifamily projects facing maturing debt was already complicated, but it has become even more difficult after the Federal Reserve’s quarter-point interest rate hike in September, according a report from the commercial real estate data analytics platform Cred iQ.

As Scotsman Guide reported Friday, multifamily developers owe more than $1.8 trillion in debt, and about $757 billion in loans are set to mature between now and 2028, according to the Mortgage Bankers Association. Nearly $300 billion in loans are due this year, while another $223 billion is due next year.

Developers who originally took out loans at around 3% are now seeing rates range from 5.5% or higher, depending on the type of loan. For many property owners trying to refinance with rates at 6% or more, they may have to contribute a large amount of money into the deal or consider selling.

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Cred iQ is putting some preliminary figures to the refinance issue by reporting that multifamily properties with maturing loans in the next few years will need a total of about $6.8 billion in fresh equity to refinance. The hardest-hit loans will be those written in the 2021-2022 timeframe at an average rate of 3.4%.

Cred iQ estimates that the Fed’s September rate increase added about $800 million to the multifamily refinance requirements. Another quarter-point increase would cost landlords an additional $900 million.

The company re-sized every multifamily loan in Fannie Maie, Freddie Mac and commercial mortgage-backed securities deals maturing between October 2026 and December 2027, which amounted to $136 billion. At current rates, including the September rate hike, 23% of those loans, and 31% of the balance, could not refinance without $6.8 billion in new equity. The median shortfall was 15% of the loan, or about $25,000 per apartment.

The gap is concentrated on loans written in 2021 and 2022, at the bottom of the rate cycle, with a median interest rate of 3.35%. Today, those rates are two or three percentage points higher.

“Some 46% of [the loans], and 57% of their balance need new equity, against 15% of the loans written in 2016 to 2018, which had years of rent growth to catch up with higher rates,” CRED iQ reported.

The analytics platform gave an example of New York City’s 20 Exchange Place, a 54-story, 767-unit apartment high rise near Wall Street. It was built in 1929 and was 94% occupied in the second quarter of this year.

The property carries a $246 million Freddie Mac loan at 4.01% coupon, which matures in February 2027. Its 2025 net operating income of $15.5 million would support a new loan of about $183 million at today’s rates, leaving a gap of about $63 million.

The financing gap is widest in San Francisco, where 70% of maturing debt for multifamily projects falls short. About 55% of maturing debt in Atlanta will also need cash infusion, followed by 51% of Denver; 46% in Phoenix and 42% in Dallas-Fort Worth.

“Most maturing multifamily loans still refinance on their own,” CRED iQ writes. “But for the 2021 and 2022 class, a refinance now means a check, and every additional hike makes it bigger. Expect more paydowns, extensions and rescue capital through 2028.”