2.8.17: What Happened to the Wall of CMBS Maturities?

The “wall of maturities” refers to the avalanche of ten-year securitized loans that were originated at the peak of the last cycle, in 2006-2007. The last batch of those mortgages comes due in 2017, and conduit lenders had assumed that many of the borrowers would provide a steady supply of lending opportunities by turning to the CMBS conduit market for refinancing. But the results have been disappointing. According to a report last month by Bank of America Analyst Alan Todd, only 55% of the maturing CMBS loans have a debt yield of at least 9% — the minimum level seen in most recently originated CMBS loans. This means that roughly 45%, or $43 billion, of the $96 billion of CMBS loans that mature this year will be ineligible for securitization, sharply reducing potential refinancing business. And the total balance of maturing CMBS loans will plunge to $21 billion in 2018.

Many borrowers appear to be turning to alternative markets, some voluntary, some involuntary. Borrowers with loans facing significant tenant rollover are being forced to seek recourse bank financing if they are strong enough to personally backstop the rollover risk with a recourse guarantee. Less-strong borrowers are sometimes forced into high-cost bridge loans until leases are extended or properties are re-tenanted. On the other side of the coin, high-quality performing loans are migrating to insurance companies or Fannie/Freddie programs (for multi-family properties).


This entry was posted in CMBS, CMBS Securities, Commercial Mortgage-Backed Securities, Michael D. Sneden, News & Recent Closings, The Banker's Mortgage Conduit, Valuexpress and tagged . Bookmark the permalink.

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