Fitch: CMBS Loans Look Good; Most Will Pay at Maturity

August 29, 2011
By Nicholas Ziegler

According to Fitch Ratings, the CMBS sector is looking good as maturing loans reach the end of their terms.

In transactions identified by the ratings agency, approximately 1,200 commercial mortgage loans totaling $17.3 billion are scheduled to mature in 2012 — a sizeable drop compared to 2,000 loans totaling $22.5 billion that matured this year. Maturities remain modest in 2013 ($13.3 billion) and 2014 ($15.5 billion) before jumping to $29 billion in 2015.

Loans scheduled to mature in 2012 have an average balance of $13.9 million and were originated between 1996 and 2007. Loans secured by office properties represent the largest concentration of maturing loans next year at 38 percent. Multifamily (22 percent), and retail (20 percent) properties follow.

Fitch continues to expect the majority of loans to payoff at maturity despite the short-term volatility of the capital markets. “Most maturing loans, particularly those from earlier vintages, benefit from stable performance and years of scheduled amortization, which make them more easily financeable in today’s market,” said Adam Fox, senior director at Fitch.

The most challenging loans to refinance are those that were originated in 2007, the peak of real estate values. “Borrowers will likely need to contribute additional equity to secure financing for five-year loans,” said Fox.