Cracks Widen in Maturity Wall

Morningstar Credit Ratings’ headquarters at 4 World Trade Center. (Photo: Joe Woolhead)

NEW YORK CITY—Two of the leading ratings agencies have used variations on the “wall of maturities” metaphor this week to describe the current status of CMBS loans coming due. Although Fitch Ratings notes that the wall is shrinking, with just $23 billion in Fitch-rated securitized commercial mortgages set to reach maturity in the balance of this year—compared to $54 billion that was due to mature in 2016 at this time a year ago—Morningstar Credit Ratings observes that “the cracks in the maturity wall are widening.”

Prompting Morningstar’s assessment was the July payoff rate for maturing CMBS. It fell to its lowest level in more than two years, declining to 62.7% from 68.0% in June.