The U.S. CMBS sector will gain a little breathing room in 2012 as the pace of securitized loans reaching maturity slows, according to Fitch Ratings.
In transactions rated by Fitch, approximately 1,200 commercial mortgage loans totaling $17.3 billion are scheduled to mature in 2012. This represents a sizeable drop compared to 2,000 loans totaling $22.5 billion that mature this year.
Maturities remain modest in 2013 ($13.3 billion) and 2014 ($15.5 billion) before jumping to $29 billion in 2015.
Loans scheduled to mature in 2012 have an average balance of $13.9 million and were originated between 1996 and 2007. Loans secured by office properties represent the largest concentration of maturing loans next year at 38%. Multifamily (22%), and retail (20%) properties follow. In the fourth quarter of 2011, maturities remain modest at only 204 loans representing $4.4 billion.
Fitch continues to expect the majority of loans to pay off at maturity despite the short term volatility of the capital markets. “Most maturing loans, particularly those from earlier vintages, benefit from stable performance and years of scheduled amortization, which make them more easily financeable in today’s market,” says Adam Fox, senior director at Fitch.
The most challenging loans to refinance are those that were originated in 2007, the peak year of real estate values. “Borrowers will likely need to contribute additional equity to secure financing for five-year loans,” says Fox.
While not all loans will pay off at maturity, Fitch continues to observe a willingness among commercial servicers to work with borrowers when property performance is not an issue. “Servicers are still reaching out to borrowers early and if needed, providing short term forbearances to complete the refinance process,” adds Fox.
The majority of maturities are expected in the first half of 2012, broken out as follows by quarter:
First quarter 2012: $6.3 billion in maturities, of which 43% is for office properties.
Second quarter 2012: $5.1 billion, 47% office.
Third quarter 2012: $3.4 billion, 31% retail.
Fourth quarter 2012: $2.5 billion, 45% retail.