Trepp LLC is projecting 2014 to be a fairly smooth year for commercial mortgage-backed securities loan maturities, with expectations for an easy start to refinancing the nearly $350 billion of CMBS loans that are slated to mature over the next three years.
But the New York-based data and analytics company is also cautioning that leverage on 10-year loans maturing between 2014 and 2017 is consistently higher than those originated in recent vintages. “Our analysis showed that the problems in 2014 won’t be so severe. Beyond that, refinancing based on where current lenders’ [loan-to-value ratios] are at could be an issue,” said Susan Persin, managing director.
Another positive is the boom in the new issue CMBS market, which surged from $50 billion in 2012 to almost $90 billion in 2013, with as much as $125 billion projected for the coming year.
By property type, multifamily properties will likely have the easiest time refinancing as loans being originated now carry higher LTVs than those originated 10 years ago. “Apartments appear to be the best-performing. Hotels are also very good. Retail, on the other hand, ended up being the riskiest,” Persin added.
Across the board, the retail sector has been plagued by the underperformance of many large tenants anchoring CMBS assets. Sears, JCPenney, Best Buy and Barnes and Noble have all announced store closings throughout 2013 that are set to affect properties securing CMBS loans, Persin said.