Shoals Ahead in the Waves of Maturities?

Trepp headquarters in New York City; the firm sees challenges ahead in refinancing 2006- and 2007-vintage CMBS.

NEW YORK CITY—Thus far in its navigation through the waves of 2005-2007 CMBS maturities, the commercial real estate industry has managed to steer clear of the shoals that could lead it to run aground. Just over 94% by balance of the $80.9 billion in non-defeased, non-delinquent securitized loans that came due between January 2015 and February of this year paid off, with just 0.29% in losses. Although the CMBS delinquency rate reached its highest level on record as nearly $50 billion in five-year loans from ’07 came due amid the still-recovering market of 2012, by ’15 the volume of new issuance was enough to digest the 10-year maturities.

Continued smooth sailing ahead? Not necessarily. “Viewing the performance of 2015 maturities, solid aggregate NOI growth and record CRE price levels in a vacuum would lead to a very positive outlook for 2016 and 2017 maturities,” according to a report this week from Trepp LLC. “Unfortunately, the bottom-up view of the market is only half of the story and the negative macro factors coming from the top down could significantly hamper the CMBS market’s ability to handle the next seven quarters of increasing maturing volumes.”