AUSTIN-Interest rates falling to levels not seen in decades is prompting a wave of refinancing of multifamily projects rather than sell in a soft market.

Kuhlman Commercial Capital Inc., an Austin-based lender to the multifamily marketing, reports interest rates are at levels not seen in 40 years. “There’ve been floor rates put on a lot of rates to protect the long-term interests, to make sure it doesn’t spiral out of control,” Dean Thompson, a Kuhlman official, tells

But in markets such as Austin, offering prices for apartment complexes are falling along with the occupancy rates. That means owners who might otherwise be of a mind to sell are sitting tight. “Austin class A pricing is coming down and some owners are choosing rather than sell at lower price than they could have gotten last year…to take advantage of the wonderful interest rates and refinance their property and hold it,” says Will Balthrope, a Grubb & Ellis Co. vice president in Dallas.

The multifamily specialist and partner Don Ostroff, also a vice president, were recently in Chicago talking to apartment owners. “Austin out of the major Texas markets is the softest in terms of rent growth,” Balthrope says. “People are projecting flat rent growth in Austin this year, where last year they were projecting 7%.”

M/PF Research, the Carrollton, TX firm that tracks apartment markets, reported that Austin’s occupancy dropped to 94.1% at midyear. Summit Properties Inc., in an announcement ahead of its upcoming financial report, said collections from its Austin properties had further worsened in the third quarter.

Balthrope says the ability to refinance at appreciably lower rates comes at a good time for owners, helping them lower their costs in the weaker market. Going from a rate of 8% or higher to the 6% range, “lowers the cost of your financing, therefore it puts a lot more money in that bottom line,” he says.

Whether selling or holding, prospective buyers and apartment owners welcome the lower rates, Balthrope says. “If they’re looking to buy an apartment it certainly makes it more attractive. And if they (owners) can’t get the prices they were last year, they’re taking advantage of these lower interest rates to refinance and hold.

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