CMBS borrowers are failing to pay off their loans in increasing numbers with just 18.7 percent of balances paid off at the maturity date in November, according to Trepp.
The real estate data provider said payoff levels had exceeded 35 percent in the summer – hitting 41.8 percent in August – but that trend had proved unsustainable.
According to its latest findings, Trepp said the percentage of loans paid by their maturity date, judged by balance amounts, was 18.7 percent at the end of November compared to 28.8 percent for October, 35.4 percent for September and 41.6 percent for August.
The average between April and July was 27.7 percent. The only month to record lower levels than November was March when the payoff percentage was 14.8 percent. The prior two months had seen average rates of 45 percent.
In mid 2008 following the credit crunch – but before delinquencies started rising sharply – the payoff rate was regularly above 70 percent.
Trepp counts conduit or conduit-like deals in its calculations but excluded already-delinquent CMBS loans and retiring defeased loans, with which borrowers replace the collateral of their loans with assets that provide the same cash flows as the original loan. When calculating payoff percentages by loan count, Trepp said, the values are often 10 percent to 20 percent higher as smaller loans have “easier time paying off than larger ones”.
The Trepp report said: “The average balances of those loans retiring timely was about $4.5 million in November. The average balance of those loan not able to pay off their balloon amount was $11.2 million in November.”