This week's column examines a wave of CMBS hotel deals, a downgrade for bonds backed by California office buildings leased to Apple, and affordable housing driving a $173 million Freddie Mac transaction. Read the entire piece by clicking "read more" below.
Hotels attract $6.2 billion financing wave: Hotel lenders accelerated their activity in late 2025, pushing seven single-asset commercial mortgage-backed securities deals to market in the past six weeks. The combined loan balance of those deals reached $6.2 billion, marking the busiest period of the year for hotel CMBS offerings.
The flurry of activity caps a strong year for hotel debt. Hotel-backed loan offerings could total at least $15 billion in 2025, according to CoStar analysis.
Lenders and investors feel more confident about the U.S. hotel industry, as new supply is expected to be muted in the near future, according to Jan Freitag, national director of hospitality analytics at CoStar.
"Our forecast for the industry is less optimistic — basically flat [room revenue] growth in 2026 — but for specific assets in specific locations, especially on the high end, pricing power remains strong," he said.
The last two hotel deals of the year are expected to be:
- JPMorgan Chase issuing a $253 million offering backed by the Public Hotel on New York's Lower East Side in Manhattan. The 367-room boutique property, owned by Ian Schrager Co. and the Witkoff Group, underwent securitization through a two-year floating-rate loan with three 1-year extension options. The financing, combined with $57 million in mezzanine debt and $43.3 million in preferred equity, refinanced existing debt and funded reserves.
- Morgan Stanley issuing a $300 million floating-rate loan for Henderson Park Capital Partners and Pyramid Global Hospitality's La Quinta Resort & Club in California's Coachella Valley. The historic 787-key property sits on 69 acres adjacent to the Santa Rosa Mountains. The resort completed a comprehensive $62.4 million renovation between May and December 2024, upgrading guestrooms, public spaces and event facilities.
Bonds backing offices leased to Apple get downgrade: Moody's Ratings has downgraded six classes of commercial mortgage bonds backed by three Sunnyvale, California, office buildings leased entirely to Apple.
The downgrade stems from a deal that reduced Apple's base rents by about 20% for two of its three leases across the 349,758-square-foot office complex, according to Moody's. The rents were cut by 27% at 420 N. Mary Ave. and by 29% at 430 N. Mary, compared to previous rates, as part of four-year extensions signed by the tech giant.
Property owner TriStar Capital did not immediately respond to a request for comment from CoStar News.
The rent reductions drove Moody's loan-to-value ratio to 149%, up sharply from loan securitization levels. The bond rating firm now estimates annual net cash flow at $12.3 million, down from $14 million at the deal's 2021 inception.
The downgrade affects the CMBS deal Natixis 2021-APPL, which carries a loan balance of $209 million. The floating-rate, interest-only loan matures in August 2026.
The downgrade comes as prominent tenants such as Apple seek rent concessions in a market where office vacancies are among the highest in Silicon Valley. The Sunnyvale market vacancy rate stands at 19.2%, up from about 11% two years ago, according to CoStar data. In the past three years, weakening demand has led to negative rent growth in core Silicon Valley markets, including Sunnyvale.
Affordable housing drives deal: Merchants Capital has completed its third Freddie Mac Q-Deal mortgage-backed securities offering of 2025. The deal raised $173 million from the sale of a pool of loans backed by five multifamily properties spanning Indiana, Pennsylvania and Illinois.
The Q-Deal program provides liquidity to smaller financial institutions originating affordable housing debt. Merchants Capital has securitized $783 million this year.
The five properties financed are as follows, each carrying an interest rate of the Secured Overnight Financing Rate plus 2.75%, according to Freddie Mac:
- Connection at Southside Works: This 280-unit mid-rise multifamily property in Pittsburgh was built in 2022. The loan is a $50.6 million refinance maturing in June 2031. The loan has a current loan-to-value ratio of 65.6% and occupancy of 92.9% as of September 2025. The property includes 82 affordable units and is managed by Greystar Real Estate Partners.
- Flats at Fishers Marketplace: Located in Fishers, Indiana, this 306-unit garden-style apartment complex was built in 2014 and secured a $46.8 million acquisition loan. The loan matures in November 2030 and has a 65.2% LTV. With 88.9% occupancy and managed by the borrower-affiliated BAM Management, the property showed an average effective rent of $18,906 per unit per year as of June.
- Nese Apartments: This 240-unit garden-style property in Whitestown, Indiana, was built in 2022 and financed with a $34.7 million acquisition loan maturing in February 2031. The property shows a 91.6% occupancy rate and has a 66.1% LTV ratio. The property includes two affordable units and is managed by BAM Management, with an average annual rent of $18,389 per unit.
- River Grove Station: This 138-unit mid-rise property in River Grove, Illinois, was built in 2021 and refinanced with a $32.8 million loan. Distinguished by per-unit financing of $237,355, it maintains strong performance with 93.5% occupancy and an average annual rent of $25,140. The loan has a 68.5% LTV and matures in November 2030, with management by Daniel Management Group.