The commercial real estate (CRE) sector faces $362 billion in maturing debt this year, according to the latest estimates from ""Trepp LLC"":http://www.trepp.com, a New York-based provider of commercial mortgage information and analytics.
[IMAGE]The company's research team, headed by Matt Anderson in its West Coast office, just updated Trepp's outlook for commercial mortgage maturities with Q4 2011 data. The team's latest estimate for 2012 represents an increase from $346 billion in commercial mortgage debt maturing in 2011.
Anderson says while liquidity has improved in the CRE sector over the last two years, ""this will still be a tall order for the market to fill"" namely because the commercial
[COLUMN_BREAK]mortgage-backed securities (CMBS) market ""has yet to hit full stride"" and many banks are now looking to trim their CRE exposure.
For the five-year period of 2012 to 2016, Trepp's research team estimates $1.73 trillion of CRE maturities, with the largest one-year sum of $371.1 billion dropping in 2013 and annual amounts declining fairly steadily in subsequent years.
The researchers also offered up their thoughts on the percentage of maturing loans that are underwater or borderline-underwater, which could reduce the chances for borrowers to extend the loan term by refinancing upon reaching their balloon date.
Trepp’s latest estimates of the loan-to-value (LTV) ratios for maturing mortgages indicate that nearly two-thirds â€" 65 percent â€" of the maturities through 2016 are underwater or close to sinking underwater, a term that describes the borrower’s situation when debt outstanding exceeds the value of the property.
""Rising values will help improve the LTV picture, but we see a special issue potentially looming for 2016 maturities,†Anderson explained.
He says as much as 56 percent of the 2016 maturities are underwater by 10 percent or more, a reflection of the large volume of 10-year mortgages that were originated at the market peak in 2006.