CMBS Maturities
It’s not a coincidence that recent reports by Fitch Ratings and Trepp have used the word wall to characterize the CMBS maturities due to occur in 2015, 2016 and 2017. “Over the next three years, more than $300 billion in conduit CMBS loan balance will mature,” according to a Trepp report that cites a preponderance of 10-year balloon loans issued between 2005 and 2007. “That’s more than 2.5 times the amount that matured from 2012 to 2014.”
In fact, Trepp notes, nearly 60% of the loans in the CMBS conduit universe will mature over the next three years. “Commercial real estate lenders, borrowers and CMBS investors alike are looking at the next three years as a true test of the strength of recovering capital markets.”
What will happen during that period is by no means certain. “Given that the majority of loans remaining in the 2005−2007 transactions are still performing—and have coupons that, on average, are higher than the current interest rate—should mean that their ability to refinance will be relatively smooth,” Fitch says in a new report on the outlook for structured finance, including CMBS. “However, a more rapid increase in interest rates than that expected could prove problematic.”