Crisis-era CMBS proving less worrisome than once feared
July 6, 2017 | by Jake Mooney and Zach Fox | SNL
High property values and abundant capital from a variety of lending sources are helping commercial real estate property owners refinance their debt, even on higher-risk loans underwritten in the boom years leading up to the last financial crisis.
Issuance of commercial mortgage-backed securities peaked in 2007 at $240.5 billion, according to S&P Global Ratings. In the years immediately following the financial crisis, when the CMBS market was largely dormant, market participants looked ahead to 2016 and 2017 and were concerned that banks and other lenders would not be able to absorb maturing loans. Without sufficient financing in the market, some properties could be pushed into default, they worried.
So far, the market seems to be clearing that “wall of maturities” with ease. With the year half over, loans are refinancing more easily than some observers expected, even as late as the end of 2016. At the beginning of 2017, S&P Global Ratings expected roughly $92 billion of CMBS loans to mature. Of that total, $60 billion has already been refinanced, S&P Global Ratings Senior Director Deegant Pandya said.
