Last month, Trepp looked at CMBS market shifts from 2019 to 2024 and how they interacted with economic conditions, borrower preferences, and lender strategies. Looking ahead to 2025, it said that the significant number of CMBS loan maturities this year could mean potential for issuance growth.
But a new Trepp report states that while a “substantial portion of CMBS issuance” won’t be due to CMBS maturities, refinancing will affect whether or not the market will top last year’s $108 billion total.
This year should see an average of about $150.9 billion in CMBS maturities, with months varying from $10 billion to $17.9 billion. The maturities are largely concentrated in Q1 and Q4 of 2025, the firm said, but then added that in total the first and fourth quarters account for almost half of maturing CMBS loan volume. This feels a bit off as an observation because you might expect two quarters, which would make half a year, in an even distribution to comprise about 50% of the activity.
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Maturity volumes vary by property type. Office has the expected highest percentage of the total in 2025 at 22.7% of total expected maturities, or $34.4 billion. Lodging, with $29.7 billion, was at 19.6%; retail at $25.7 billion was 17% of the count. Retail was 17% of maturities facing $25.7 billion. Multifamily was $15.6 billion, or 10.4%. Last was the “other” category at $18.9, with the smallest percentage of 12.2%.
However, the $150.9 billion total is a bit deceptive. About $63.6 billion, or 42.1%, are considered “hard” maturities. They must be either paid off or refinanced by the scheduled maturity date and there are no further options. The other 57.9%, or $87.3 billion, have extension options. This second group could be pushed further into the future. Of these, $48.6 billion, or 55.6% of the loans with extensions still available, face their hard maturity in 2026. The heaviest portions of monthly extensible loans are in October, with $13.3 billion, and November, with $13.8 billion. That could mean a significant portion of the maturity impact could shift to next year, depending on macroeconomics, market conditions, and decisions by borrowers and lenders.
One of the biggest factors will be how many of the hard maturities will be able to refinance. That depends on cash flows and debt service cover ratios. Trepp categorized the loans by debt yield (DY) to see how likely they are to get refinancing. Loans with a DY greater or equal to 10% are the most likely as their cash flows are large enough to enable new debt. When the DY is between 9% and 10%, refinancing may be possible but they will need some deleveraging or additional borrower equity. Loans with a DY under 9% will need “substantial capital contributions” to get refinancing.
Out of the $63.6 billion in hard maturities, 59% have a DY of at least 10%; 11% are in the 9% to 10% range; and 31% of the loans have a DY below 95, which suggests a distress sale or alternative refinancing outside of CMBS.
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