THE pressure on the United States commercial property market appears to be easing. Latest figures show only 13% of debt is due to mature this year and loan prices continue to decline.
The world’s largest loan advisor DebtX found commercial real estate loan prices fell 5.4% in 2009.
According to the Mortgage Bankers Association’s 2009 Commercial Real Estate/Multifamily Survey of Loan Maturity Volumes, the volume of commercial and multifamily (apartment sector) mortgage debt maturing in 2010 and 2011 is relatively low.
The MBA found of the $US1.45 trillion balance of outstanding mortgages held by non-bank investors, only 13% of the total ($US183.9 billion) will mature in 2010 and 7% ($US99.8 billion) in 2011, which is substantially lower than 2009.
MBA’s vice president of commercial real estate research Jamie Woodwell said the fact that a disproportionate share of commercial and multifamily mortgages were made in 2005, 2006 and 2007 means that for most investor groups, only a fraction of the balance will be maturing in the next couple of years.
“Investor groups’ maturity schedules are generally designed to match their liabilities. Many maturing mortgages have built-in extension options, and most investor groups and servicers have considerable discretion in how they deal with loans that may not be able to immediately refinance at maturity.”
Based on MBA’s survey, of the $US1.45 trillion balance of outstanding mortgages held by non-bank investors, 13% of the total ($US183.9 billion) will mature in 2010 and 7% ($US99.8 billion) in 2011. Commercial/multifamily mortgage maturities vary significantly by investor group.
Just 2% ($US4 billion) of the outstanding balance of multifamily mortgages held or guaranteed by Fannie Mae, Freddie Mac, FHA and Ginnie Mae will mature in 2010.
Life insurance companies will see 7% ($US17.5 billion) of their outstanding mortgage balances mature in 2010.
Among loans held in CMBS, 12% will come due in 2010, including 7% of the $US650 billion of loans in fixed-rate conduit CMBS and 72% of the $US54 billion of loans in floating rate and large-borrower CMBS.
32% ($US69 billion) of commercial mortgages held by credit companies and other investors will mature in 2010.
Meanwhile DebtX has found the value of Commercial Real Estate loans priced that collateralize CMBS fell to 75.9% as of December 31 2009, down from 77.7% as of November.
For all of 2009, loan prices declined by 5.4% from 81.3% on January 30 2009 to 75.9% on December 31.
DebtX president of loan sales William Looney said weakening commercial real estate fundamentals were a major theme of 2009.
“In December, the trend of declining CRE performance, combined with rising risk-free rates and a steepening yield curve, led to another drop in US CMBS collateral prices,” he added.
DebtX priced 60,360 commercial real estate loans with an aggregate principal balance of $US706 billion as of December 31 2009. Each of these loans collateralize 628 US CMBS trusts.
Australian Property Journal
