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Home | News | Loss Mitigation | Fitch: $23 Billion in Commercial Mortgages Coming Due in 2011
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Fitch: $23 Billion in Commercial Mortgages Coming Due in 2011

Fitch Ratings says 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 a new report released Friday by the ratings agency, the maturing loans were originated between 1996 and 2007 and are predominantly secured by retail, office, and multifamily properties. Fitch says 30 percent are not expected to pass its refinancing test.

""Fitch Ratings"":http://www.fitchratings.com says approximately 2,000 commercial mortgage loans are due to mature over the next 12 months, representing an outstanding balance of $22.5 billion.

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According to a new report released by the ratings agency Friday, 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.

Fitch says more than half of the maturities -- $12 billion -- were originated between 2005 and 2007, when real estate values grew to their highest levels.

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""Borrowers of maturing five-year interest only loans will need to contribute additional equity to reduce debt levels,"" said Adam Fox, a Fitch senior director. ""Five-year loans will face more difficulty in refinancing, especially office loans with significant upcoming lease rollover.""

Of the 2,000 loans maturing, 248 with an outstanding balance totaling $5 billion are in special servicing. While this is a high percentage, Fitch says nearly half of the loans ($2.3 billion) are current on debt service payments. The agency's analysts explained that these loans are likely with the special servicer for an extension or short term forbearance to complete refinancing.

Of the loans maturing in 2011, Fitch says $16 billion, or 70 percent, are expected to pass its refinance test. This is because most of these loans have 10-year maturities and are not experiencing leverage issues.

""Loans that pass Fitch Ratings' refinance test will be in a better position to be refinanced as liquidity continues to return to the CMBS [commercial mortgage-backed securities] market,"" Fox said.

Of the remaining 30 percent not expected to pass the refinancing test, loss expectations derived are already reflected in their current ratings.

The majority of the 2011 maturities -- $12.9 billion â€" are expected in the second half of the year.

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About Author: Carrie Bay

Carrie Bay
Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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