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Around 20% ($929B) of the $4.7T outstanding commercial mortgages will mature this year, 28% higher than 2023, given that many loans had been extended or modified a year ago, according to a Mortgage Bankers Association survey.
The number is 40% higher than the national association’s earlier estimate of $659B.
“The lack of transactions and other activity last year, coupled with built-in extension options and lender and servicer flexibility, has meant that many loans set to mature in 2023 have been extended or modified and will now mature in 2024, 2026, 2028 or in other coming years,” said Jamie Woodwell, head of commercial real estate research, MBA.
“Volatility and uncertainty around interest rates, a lack of clarity on property values, and questions about some property fundamentals have suppressed sales and financing transactions. This year’s maturities, coupled with greater clarity in those areas, should begin to break the logjam in the markets.”
By property type: 12% of mortgages backed by multifamily properties, 17% of those backed by retail, and 18% for healthcare properties will mature this year.
Among loans backed by office properties, 25% will be due in 2024, as will 27% of industrial loans and 38% of hotel/motel loans.
“The vast majority of commercial real estate loans are provided by regional banks, which face the risks of property owners struggling to service debt payments as demand for their office properties weakens,” said José Torres, senior economist, Interactive Brokers.
Treasury Secretary Janet Yellen had also raised concerns. “The higher interest rate environment, coupled with many commercial real estate loans coming due and needing to be refinanced in a context where vacancy rates are quite high, is going to put a lot of stress on the owners of these properties.”