Volume of Maturing Commercial/Multifamily Mortgages Low in Coming Years

MBA (3/21/2008 ) Vasquez, Jason
In its latest Research DataNote, the Mortgage Bankers Association said the commercial and multifamily mortgage markets face limited exposure to refinance risks stemming from the current credit crunch. The report said relatively few commercial/multifamily mortgages will mature in the next two years.
"There's been a general impression that a large volume of commercial/multifamily mortgages are coming due this year and next," said Jamie Woodwell, MBA’s senior director of commercial/multifamily research. "The reality is that 2008 and 2009 will see a relatively small volume of maturing mortgages, with the majority of commercial mortgage-backed securities loans not maturing until 2015 or later."

Capturing data from JPMorgan and Wachovia Capital Markets, the DataNote reported more than $600 billion in outstanding loans from CMBS fixed-rate deals. Of this, only $16 billion is scheduled to mature in 2008 and another $19 billion in 2009. The surge in sales and financing volume during 2005, 2006 and 2007, coupled with CMBS loans tending to have a 10-year term, mean that the majority of CMBS loans will not mature until 2015 or later. This means $98 billion of loans are scheduled to mature in 2015; $128 billion in 2016; and $127 billion in 2017.

Of loans due in the coming years, the majority are well-seasoned and have been amortizing. JPMorgan reports that $14 billion of the $16 billion maturing in 2008 are fully amortizing, as are $14 billion of the $19 billion coming due in 2009. According to Wachovia Capital Markets, more than two-thirds of the volume of loans coming due prior to May 2009 was originated prior to 2000.

In addition to fixed-rate conduit deals described above, the DataNote reports that Wachovia Capital Markets identified $30 billion of large-loan floating rate deals that will come due prior to May 2009. The maturity dates of these loans are spread throughout the period, with relatively larger volumes—$3.5 billion and $3.3 billion respectively—coming due in August and October 2008.

The DataNote focuses on maturing mortgages in the CMBS market. Banks and thrifts will be more likely to have shorter-term and adjustable rate loans, while life companies will tend to have longer-term fixed rate loans. Each group's maturity patterns will also be affected by the ups-and-downs of its originations experience.