The first preferable thing to do when your loan matures is to pay it off, of course. If your CMBS loan matures in 2013 or 2014, your loan has probably been amortizing for the last eight to nine years and the initial leverage wasn’t egregious, so absent some property or market problem, the majority of these loans should be able to refinance.

In instances where the borrower cannot adequately refinance the loans, there are alternative options that include an extension and where necessary, a possible discount to the loan amount. It is a very different story if your loan was originated in 2005, 2006 or 2007. In those instances, you likely have paid interest only and it is very likely that the property is highly overleveraged!

Some industry experts state that at least two-thirds of the loans maturing between 2015 – 2017 will unlikely qualify for a refinance at maturity without significant capital infusion from the borrower. Reports further state that 80percent of all CMBS loans maturing in 2007 will unlikely qualify for refinance and borrowers will need at least $100 billion in additional equity to help loans qualify. So, where does this “additional equity” come from? So, what do you do if you have a CMBS loan maturing in 2015 – 2017 and you cannot pay if it off and you are not prepared to infuse significant additional capital to pay off this non-recourse loan?

Our upcoming webinar on June 27th is dedicated to this very topic. 

Visit our webinar page at www.1stsss.com to sign up for this free webinar. No one has all the answers for sure, but we will begin exploring some options to consider. This additional equity will likely only come about IF the borrower and new equity source believe that the property is only temporarily overleveraged and a little time will correct the situation. I think hard data will lead people to conclude differently in many cases.