{"id":1004323076,"date":"2019-05-13T04:07:41","date_gmt":"2019-05-13T12:07:41","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004323076"},"modified":"2019-05-13T04:07:41","modified_gmt":"2019-05-13T12:07:41","slug":"only-ripples-likely-from-next-cmbs-maturity-wave","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/only-ripples-likely-from-next-cmbs-maturity-wave\/","title":{"rendered":"Only Ripples Likely From Next CMBS Maturity Wave"},"content":{"rendered":"
\"\"

Steve Jellinek, Vice President, Morningstar. Image courtesy of Morningstar<\/em><\/p><\/div>\n

What begins, must end, one way or another. As loan originators gradually ramped up after the Great Recession, and the packaging of commercial mortgage-backed securities grew apace, so the CMBS sector now faces a wave of maturities from 2020 through 2023 that totals more than $170 billion. According to a new Morningstar research report, the good news is that the on-time payoff rate is likely to remain in the range of 80 to 85 percent.<\/p>\n

This would be stronger than the payoff rate than during 2015 and 2017, when $222.48 billion in CMBS hit maturity, \u201cbecause of more selective underwriting standards, rising valuations, and the Fed\u2019s dovish interest-rate outlook amid a slowing economy,\u201d<\/em> the company says. The pace of CMBS maturities rises from nearly $20 billion in 2020 to nearly $65 billion in 2023. Almost all of these are loans that were originated post-recession, Morningstar explains, so that they generally have lower leverage, on top of which the underlying properties have typically risen in value.<\/p>\n

In 2020, the loans that are likeliest to miss their payoffs are the 8 percent with LTVs greater than 80 percent. These total about $1.59 billion in unpaid principal and might have difficulty refinancing, Morningstar suggests. <\/p>\n

CMBS issuance has declined notably<\/a> in 2019, to $16 billion in the first quarter, versus $19 billion 12 months earlier, according to figures from the Mortgage Bankers Association. Some industry observers expect about a 10 percent drop this year, though others think that\u2019s a bit pessimistic. Meanwhile, CMBS delinquency rates have continued to fall since the end of 2017. As of February, the rate was only 3.78 percent.<\/p>\n

Property types differ<\/h2>\n

Because demand for distribution and flex space is running ahead of supply, even as strong absorption is pushing vacancy rates further down, industrial loans look to be headed toward the highest payoff rates.<\/p>\n

Surprisingly, perhaps, Morningstar expects maturing loans on retail properties to have the second-highest payoff rate. This is in sharp contrast to the previous maturity wave, when over-leveraged retail loans were a major concern. This time, \u201clenders have shifted toward lower-leveraged, higher-quality properties and retail sales remain healthy,<\/em>\u201d wrote Morningstar Vice President Steve Jellinek.<\/p>\n

A combination of three metrics is making office loans \u201ca major concern<\/em>,\u201d says Morningstar. This property type faces significant exposure\u2014about 18.4 percent\u2014in terms of principal balance, it has a substantial percentage of LTVs over 80 percent, and it has the second-highest percentage of loans\u2014after multifamily\u2014with debt yields greater than 9 percent. All of these are compounded by a large influx of deliveries, which will hamper both occupancy and rent growth.<\/p>\n","protected":false},"excerpt":{"rendered":"

A new Morningstar report indicates that relative to the last big surge of maturities, between 2015 and 2017, the upcoming one will see a higher rate of on-time payoffs. <\/p>\n","protected":false},"author":882,"featured_media":1004323229,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21825,23891,21742],"tags":[35826,38327,34040],"class_list":["post-1004323076","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-finance","category-national","category-latest","tag-cmbs","tag-morningstar-inc","tag-mortgage-bankers-association"],"acf":[],"yoast_head":"\nOnly Ripples Likely From Next CMBS Maturity Wave - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/only-ripples-likely-from-next-cmbs-maturity-wave\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Only Ripples Likely From Next CMBS Maturity Wave\" \/>\n<meta property=\"og:description\" content=\"A new Morningstar report indicates that relative to the last big surge of maturities, between 2015 and 2017, the upcoming one will see a higher rate of on-time payoffs.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/only-ripples-likely-from-next-cmbs-maturity-wave\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2019-05-13T12:07:41+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2019\/05\/dollar.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Scott Baltic\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/only-ripples-likely-from-next-cmbs-maturity-wave\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/only-ripples-likely-from-next-cmbs-maturity-wave\/\",\"name\":\"Only Ripples Likely From Next CMBS Maturity Wave - 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