Approximately 2,000 commercial mortgage loans are due to mature over the next 12 months, representing an outstanding balance of $22.5 billion, according to Fitch Ratings.
The maturing loans, which have an average balance of $11.4 million, were originated between 1996 and 2007 and are predominantly secured by retail (32%), office (30%) and multifamily (16%) properties.
The majority of the maturities are expected in the latter half of 2011. Roughly $9.4 billion of loans will mature in the first two quarters, while $12.9 billion worth will mature in the second half of the year.
More than half of the maturities ($12 billion) were originated between 2005 and 2007, when real estate values grew to their highest levels.
‘Borrowers of maturing five-year interest only loans will need to contribute additional equity to reduce debt levels,’ says Adam Fox, senior director at Fitch. ‘Five-year loans will face more difficulty in refinancing, especially office loans with significant upcoming lease rollover.’
Office properties constitute about 28% of the $6.8 billion in loans set to mature in the fourth quarter.
Of the 2,000 loans maturing this year, 248 are in special servicing. While this is a high percentage, nearly half of the loans ($2.3 billion) are current on debt service payments, Fitch says. These loans are likely with the special servicer for an extension or short-term forbearance to complete refinancing.
SOURCE: Fitch Ratings
