ONLY 52% of Maturing CMBS Loans in July Have Refi’d
By: Myles, July 29th, 2009
A total of ONLY 52 percent of the $1.8 billion of Commercial Mortgage Backed Sercurity (CMBS) loans that matured in July 2009 were refinanced, according to analysis by Barclays Capital.
That’s in line with the 53 percent refinance rate for the $9.5 billion of loans that have matured so far this year and indicates that borrowers continue to have difficulties lining up take-out financing.
The only exceptions might be those with apartment properties because both Fannie Mae and Freddie Mac continue writing loans, albeit at a far slower pace than in recent years.
Further evidence of the refinancing difficulties is the increasing volume of loans that remain outstanding even three months after their maturity.
- Only 51 percent of the loans that matured in January 2009 had been refinanced by the end of February 2009. Three months later, that percentage had grown to 76 percent.
- But only 53 percent of the loans that matured in April had been refinanced three months later.
Not surprisingly, the lower a loan’s debt yield, the more difficult it is to refinance. Debt yield — or exit yield – is determined by dividing a property’s cash flow by its loan’s balloon balance. The higher the number, the better prospects a loan would have of getting refinanced.
The investment bank found that only 34 percent of loans with debt yields of less than 10 percent have refinanced. And that bodes poorly for the CMBS market, given that the average debt yield for loans in the CMBX series of indices is only 9.7 percent, according to a Barclays estimate based on most recent available net operating income figures.
- Even loans with very high debt yields are having a tough time. Loans with debt yields of 20 percent or more have an 83 percent refinance rate.
- Meanwhile, loans with debt yields of 10 percent to 15 percent had a 61 percent refinance rate, while loans with debt yields of 15 percent to 20 percent had a 68 percent refinance rate.
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