LOS ANGELES-The multifamily real estate industry is in thefourth or fifth inning of the distress cycle. That was the generalconsensus among experts that participated in the session, “DistressChess Match: Whose Move?” part of yesterday’s RealShare Apartments2010 conference in Downtown L.A.

Of the $870 billion of outstanding multifamily debt in themarket, GSEs hold 43.6% of the share, noted Jess Bressi, a partnerwith Luce Forward and moderator of the panel. Coming in second wasbanks, which hold 24% of all multifamily debt, and CMBS rounded outthe top three, with 12.4% of the total. But the numbers don’t tellthe whole story of the distress market; there are many moving partsto getting deals done today, according to the special servicers andinvestors on the panel.

There hasn’t been much movement in terms of distresstransactions taking place. One reason is the difficulty in findingfinancing. Gary Tenzer, senior director, principal and co-founderat George Smith Partners, shared that Fannie Mae and Freddie Macwon’t touch such deals, and banks rarely lend to distressedsituations. D. Scott Lee, senior managing director of LTVentures,added that mezzanine debt isn’t penciling out in most cases,either. Private, bridge or hard money lenders are willing to lendto distressed situations, but as Stephan Kachani, vice president ofLone Oak Fund, pointed out, they tend to prefer class C propertiesin tier-A locations.