The significant amount of CMBS conduit loan maturities in 2015-2017 will provide an unprecedented opportunity for CMBS conduit loan mortgage brokers to increase their origination volume in the upcoming years.
“Recently, Jim Brett, our CMBS bond analyst and head of CMBS conduit loan underwriting at ValueXpress, performed a sort through our Trepp database of all existing CMBS conduit loans to quantify the amount of loans maturing in the 2015-2017 time frame,” commented Michael D. Sneden, Executive Vice President at ValueXpress. “The results are impressive.”
The large amount of loan maturities stems from the aggressive underwriting and high property values prevalent in 2005-2007 that resulted in record CMBS origination levels of $166 billion in 2005, $198 billion in 2006 and $228 billion in 2007. This three-year period was the only one in which U.S. CMBS loan originations exceeded $100 billion. Since most of the loans have a 10-year term, the majority is maturing in 2015-2017.
The results of Jim’s search are provided in the table below:
Given CMBS conduit loan originations of $86 billion in 2013 and just shy of $100 billion in 2014 with significantly lower CMBS conduit loan maturities, volume in the 2015-2017 period is poised to easily exceed $100 billion in each year.
“The only caveat are those properties that are not performing at levels that support refinancing the maturing loan balance,” commented Sneden. “Those loans will require mezzanine financing in conjunction with the CMBS first mortgage and/or fresh equity to avoid default.”