Commercial real estate (CRE) debt totaling $362 billion is set to mature this year, according to new data from Trepp LLC. This level is up from the $346 billion in CRE debt that matured in 2011.
For the five-year period from 2012 to 2016, Trepp estimates there will be $1.73 trillion of CRE maturities. Furthermore, Trepp warns that the loan-to-value ratios (LTV) for the maturing mortgages indicates that nearly two-thirds of the maturities through 2016 are underwater or borderline-underwater.
‘Rising values will help improve the LTV picture, but we see a special issue potentially looming for 2016 maturities,’ says Matthew Anderson, managing director of Trepp. ‘We estimate that as much as 56 percent of the 2016 maturities are underwater by 10 percent or more, reflecting the large volume of 10-year mortgages that were originated at the market peak in 2006.’
Anderson adds that although ‘liquidity has improved in the last two years, this will still be a tall order for the market to fill with the commercial mortgage-backed securities market not yet hitting its full stride and many balance-sheet lenders looking to trim their CRE exposure.’