Good news is on the horizon for the commercial mortgage-backed securities (CMBS) sector, as fewer loans are scheduled to mature in 2012, Fitch Ratings reports.
In Fitch-rated transactions, approximately 1,200 commercial mortgage loans totaling $17.3 billion are scheduled to come due next year. By comparison, 2,000 loans totaling $22.5 billion matured this year. Fitch says maturities will 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%.
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, a senior director at Fitch.
The most challenging loans to refinance are those that were originated in 2007, the peak of real estate values. "Borrowers will likely need to contribute additional equity to secure financing for five-year loans," Fox adds.
Although not all loans will pay off at maturity, Fitch says it continues to observe 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," Fox explains.
