The percentage of loans paying off on their balloon date hit a 12-month low last month, according to the just-released Trepp July 2012 Payoff Report. With only 26.3% of loans reaching their balloon date paid off, the July total was well under the 12-month average of 41.6%. (This number simply sums the averages of each month and divides by 12; there was no balance weighting across the months.)
By loan count (as opposed to balance), 33.3% of loans paid off, which means the 12-month rolling average is now 52.2%. The disparity between the volume-based total and the count-based total indicates that it was mostly small balance loans that managed to pay off in June.
In comparison, the May payoff rate registered a paltry 29.4%. At the time, that was the lowest reading since October 2010, when the payoff percentage was 22.3%. July’s 26.3% payoff percentage was even lower than May’s 29.4%.
Prior to 2008, the monthly payoff percentages were typically well north of 70%. Since the beginning of 2009, however, there have only been four months in which more than half of the balance of loans reaching their balloon date actually paid off.
“These statistics are not surprising to us,” noted Jim Brett, Senior Underwriter at ValueXpress. “We recently helped a borrower who had a matured CMBS conduit loan and the special servicer was putting substantial pressure on the borrower to close. We had to process the loan quickly, and when the special servicer demanded $500,000 in late fees and default interest right before closing, we stepped in and helped with negotiations. We are actively searching the CMBS conduit loan universe to help other borrowers pay off their maturing CMBS conduit loans as there are obviously a lot a similar situations out there.”