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Multifamily Property Classification

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Multifamily Investment Property Classifications

Crefcoa provides multifamily housing and apartment loans where the building is classified as “A”, “B”, and “C” as long as they are acceptable to Lender in both physical condition and market attributes. The building classifications are as follow and may vary from market to market.

Multifamily Property Classifications Overview

Class A Multifamily
  • Generally, garden product built within the last 10 years
  • Properties with a physical age greater than 10 years but have been substantially renovated
  • High-rise product in select Central Business District may be over 20 years old
  • Commands rents within the range of Class “A” rents in the submarket
  • Well merchandised with landscaping, attractive rental office and/or club building
  • High-end exterior and interior amenities as dictated by other Class “A” products in the market
  • High quality construction with highest quality materials
Class B Multifamily
  • Generally, product built within the last 20 years
  • Exterior and interior amenity package is dated and less than what is offered by properties in the high end of the market
  • Good quality construction with little deferred maintenance
  • Commands rents within the range of Class “B” rents in the submarket
Class C Multifamily
  • Generally, product built within the last 30 years
  • Limited, dated exterior and interior amenity package
  • Improvements show some age and deferred maintenance
  • Commands rents below Class “B” rents in submarket
  • Majority of appliances are “original"
Class D Multifamily
  • Generally, product over 30 years old, worn properties, operationally more transient, situated in fringe or mediocre locations
  • Shorter remaining economic lives for the system components
  • No amenity package offered
  • Marginal construction quality and condition
  • Lower side of the market unit rent range, coupled with intensive use of the property (turnover and density of use) combine to constrain budget for operations

What You Need to Know

Class A assets -- and Class B assets located in major markets -- typically command more interest from lenders. Life companies, pensions, REITs, agency lenders and conduits aggressively pursue Class A assets. As a result, you can expect:
  • More financing options
  • Lower rates
  • Longer fixed rate terms and amortizations
  • Higher leverage (up to 80% with options for mezzanine debt or equity)
  • Asset is primary source of collateral with no personal guarantees (non-recourse)
  • Lower debt service coverage requirements (as low as 1.15:1)
  • Depending on the market, CAP rates in the 4%-6% range


Class B and C assets lose some interest from institutional investors and borrowers typically obtain financing from banks, agency lenders and specific purpose REITs. As a result, you can expect:

  • Fewer financing options
  • Slightly higher rates
  • Fixed rate with balloon terms or 5 year resets
  • 75% leverage with no option for secondary debt
  • Non-recourse for assets located in major markets
  • Recourse for assets located in secondary and tertiary markets
  • Depending on the market, CAP rates in the 6%-8% range


Class C and D assets tend to be financed by local banks with little to no interest from secondary market lenders. As a result, you can expect:

  • Limited financing options
  • Rates 100-200 bps higher than higher quality assets
  • Shorter fixed or floating rate terms
  • 65% (75% for strong sponsors in major markets) leverage with no option for secondary debt
  • Personal recourse
  • Depending on the market, CAP rates north of 8%

Visit Crefcoa's home page to learn more about all of our commercial property loans and apartment building loans. Or, contact a commercial real estate loan professional today.