The volume of commercial and multifamily mortgage debt maturing in 2010 and 2011 is relatively low, according to the Mortgage Bankers Association's (MBA) 2009 Commercial Real Estate/Multifamily Survey of Loan Maturity Volumes.
Of the $1.45 trillion balance of outstanding mortgages held by nonbank investors, only 13% of the total ($183.9 billion) will mature in 2010, and 7% ($99.8 billion) will mature in 2011. The survey also found that maturities vary considerably by the type of investor holding the loan.
‘Commercial and multifamily mortgages tend to be long-term loans, often for 10 years or more,’ says Jamie Woodwell, the MBA's vice president of commercial real estate research. ‘The fact that a disproportionate share of commercial and multifamily mortgages were made in 2005, 2006 and 2007 means that for most investor groups, only a fraction of the balance will be maturing in the next couple of years.
‘Investor groups' maturity schedules are generally designed to match their liabilities,’ Woodwell adds. ‘Many maturing mortgages have built-in extension options, and most investor groups and servicers have considerable discretion in how they deal with loans that may not be able to immediately refinance at maturity.’
The MBA's 2009 survey collected information directly from servicers on the maturity years of more than $1.5 trillion in outstanding mortgages, including $1.45 trillion of nonbank commercial/multifamily holdings. Only small shares of the commercial and multifamily mortgage debt held by life insurance companies, Fannie Mae, Freddie Mac or the Federal Housing Administration (FHA), or in fixed-rate commercial mortgage-backed securities (CMBS) will be coming due in 2010 or 2011.
Greater shares of mortgages held in short-term and floating-rate CMBS and by credit companies, warehouse facilities and other investors will mature in 2010 and 2011.
Based on the MBA's survey, just 2% ($4 billion) of the outstanding balance of multifamily mortgages held or guaranteed by Fannie Mae, Freddie Mac, the FHA and Ginnie Mae will mature in 2010. Life insurance companies will see 7% ($17.5 billion) of their outstanding mortgage balances mature this year.
Among loans held in CMBS, 12% will come due in 2010, including 7% of the $650 billion of loans in fixed-rate conduit CMBS and 72% of the $54 billion of loans in floating-rate and large-borrower CMBS. Thirty-two percent ($69 billion) of commercial mortgages held by credit companies and other investors will mature in 2010.
The bank lending market tends to be distinct from the more institutional commercial/multifamily mortgage market represented by life insurance companies, Fannie Mae, Freddie Mac, FHA and the CMBS market, the MBA notes. The large number and diversity of banks and thrifts also means that while the report presents information on more than $100 billion of commercial and multifamily mortgages held by banks and thrifts, those results are not believed to be generalizable.
The dollar figures reported are the unpaid principal balances as of Dec. 31, 2009. Because most loans pay down principal, the balances at the time of maturity will generally be lower than those reported in the survey, the MBA adds.
SOURCE: Mortgage Bankers Association