Recent reports and articles have discussed upcoming commercial real estate debt maturities, with the main focus on the office sector. A white paper released by CommercialEdge indicated that “conditions are ripe for a spike in commercial mortgage delinquencies” due to rising interest rates, lender cut backs and weaker property fundamentals. Citing from Trepp, it was noted that 5.6% of CMBS loans were in special servicing as of April 2023 – down from 10.5% during the pandemic but twice pre-pandemic levels (2.7%).
The report also highlighted that 15.6% of office properties nationwide will reach maturity by 2025; 13/5% industrial property loans will mature between 2023-2025; 24/7 % industrial inventory subject to maturing loans is highest in Columbus OH; while Los Angeles has a significant percentage (20%) reaching maturity between 2025 too.. Yardi Matrix Director of U.S Research Paul Fiorilla commented: “Every property type has maturing loans…defaults are much different among property types…distress won’t be monolithic throughout the industry.” He further added: “Demand for apartment, industrial and self-storage remains healthy” compared to 2005-2007 when banks lent aggressively with 90%-plus leverage & optimistic rent growth assumptions”.
