Debt markets and DFW, September 2026 reporting
The backdrop got harder in September
The Fed raised rates for the first time since July 2023. The increase was 25 basis points, to a range of 3.75% to 4%, and the 10-year Treasury is sitting above 5%.
At the same time, a lot of apartment debt is coming due. CRE Daily, summarizing Wall Street Journal reporting, puts it at about $757 billion from 2026 through 2028, with nearly $300 billion maturing this year alone. Much of that money was borrowed near 3%. Refinancing today means something closer to 6%.
The strain is showing up in the numbers. Morgan Stanley has multifamily CMBS delinquencies at 7.1%, up from 1% in October 2023. Green Street says apartment values are still more than 20% below their 2022 peak.
That is the hard part. Here is where it gets interesting.
Where the pressure is landing
Dallas-Fort Worth built more apartments than almost anywhere. According to Colliers, its construction pipeline peaked above 64,000 units in 2023 and has shrunk for 12 straight quarters since. Demand has held up. The metro absorbed roughly 12,000 units in the second quarter, one of the highest totals in the country.
Rents have not caught up. Transwestern puts DFW occupancy at 93.8% for the second quarter, with asking rents still down 2.6% from a year ago.
The owners under the most pressure are the ones who bought near the top with debt that is now coming due. Bisnow reports that distressed pre-1990 DFW properties are trading at discounts of up to 60%, depending on how distressed they are. Most DFW sales this year have been older buildings, a sharp reversal from 2025, when about 60% of sales were properties built since 2010.
Lenders are part of the story now. Some are taking properties back and selling them directly to buyers with the cash to renovate.
Colliers' Mark Allen thinks the discount window may last about 18 months before concessions burn off and rents start climbing again. Maybe. That is a forecast, not a fact.
Why DFW has my attention
I will be straight with you. I have been spending more time in this market, studying what is trading and learning from operators who are buying there right now. Nothing to share yet, and I won't pretend otherwise. More to come.
Here is how I am reading it. When a property sells from a lender, it usually means the capital structure broke. It does not automatically mean the building is broken.
That distinction is most of the work. Operations can protect a sound capital structure. They cannot rescue a broken one. So the first question on any discounted deal is why the last owner failed. If it was the debt, a new owner with sensible leverage may have real room. If it was the building, the discount may not be big enough.
How I look at a discounted deal
- Coverage run first, on in-place income at today's rate, not the rate we hope for
- Rents built from today's effective rents, after concessions, not asking rents
- A flat rent case: if rents stay where they are for two years, does it still work
- Older buildings priced for what they are: roofs, plumbing, and deferred maintenance in the budget before the offer, not after
A discount tells you what the last owner paid for being wrong. It does not protect you from being wrong yourself.
One question worth sitting with
The opportunity in DFW is real. So is the reason it exists. A cheap building bought with the same assumptions that broke the last owner is not a bargain. It is the same deal at a lower price.
When you see a property priced at a steep discount, what is the first thing you want to know about why? I would genuinely like to hear how you think about it.