Understanding the 2024 CMBS Loan Maturities and Trends

Understanding the 2024 CMBS Loan Maturities and Trends

KBRA has recently published valuable insights into the anticipated trends surrounding loan maturities in U.S. commercial mortgage-backed securities (CMBS) for 2024. The study reveals a significant finding that over 85% of CMBS loans set to mature in 2024 have successfully gone through the refinancing process. However, this marks a decline from the impressive 94% refinancing rate seen in 2023. In addition, the report highlights that the payoff rate based on loan balance has also decreased, sliding from 71.8% down to 66.6%. This pattern hints at persistent refinancing challenges particularly encountered by larger loans relative to their smaller counterparts.

Key Insights on 2024 CMBS Loan Issuance

The KBRA report sheds light on the refinancing dynamics of loans amounting to $56.2 billion from both conduit and single-asset single borrower (SASB) CMBS transactions maturing in 2024. There is no denying the feat of successfully refinancing a majority of these loans, yet the drop in the refinancing percentage signals the underlying challenges that continue to loom over the commercial real estate (CRE) market. With total issuance for CMBS surpassing an unprecedented $100 billion in 2024, a figure not matched since the global financial crisis, it reinforces the notion that the commercial real estate landscape is under strain. Throughout the year, property values in the CRE sector have often faced downward pressures as the Federal Reserve's decisions to maintain interest rates only recently transitioned to cuts in September.

Breaking Down the CMBS Loan Maturity Statistics

Exploring the 2024 CMBS loan maturities offers an intriguing wealth of numerical insights. In total, loans worth $56.2 billion reached maturity from 1,807 separate loans. As indicated, the 85.6% refinancing rate skews high when considered by loan count, whereas based on loan balance, the figure dips to 66.6%. A more detailed look reveals that conduit loans exhibited an exceptional payoff rate of 86.1% by count and 69.1% by balance, providing a stark contrast to the SASB's outcomes of only 67.9% and 63.4%, respectively.

Diverse Performance Across Property Types

The disparity in performance does not end there. For office loans, a concerning 41.2% failed to refinance successfully by count, and when considering balance, that figure escalated to 70.4%. In comparison, mixed-use loans recorded 20% by count (37.5% by balance), retail loans faced 11.7% (18.7%), and lodging properties showed 8.8% (14.2%) unsuccessfully carrying through their maturities. Multifamily loans, on the other hand, painted a different picture altogether; while only 5.8% of these loans by count did not refinance, they carried substantial weight as they represented 41.9% of the total multifamily loan balance maturing in 2024.

Future Considerations for Loan Maturities

As the dynamic shifts in the market continue toward 2025 and 2026, the loan payoffs from 2024 might provide critical insights into the $144.7 billion worth of loans maturing over the next two years. It will be crucial for investors, stakeholders, and market analysts to monitor these developments closely to position themselves strategically in the evolving commercial real estate landscape.

Exploring Related Publications

For those interested in comprehensive data surrounding CMBS and its future trajectory, KBRA has enhanced their resources through a variety of related publications that delve into different aspects of CMBS. From the "CMBS Trend Watch: December 2024" to the "2025 CMBS Sector Outlook: Twin Peaks?", these documents offer in-depth analysis that can further illuminate current market trends.

About KBRA

KBRA is a widely respected full-service credit rating agency, recognized in regions such as the United States, the European Union, and the United Kingdom. It specializes in offering structured finance ratings and has positioned itself as a resource for investors aiming to fulfill regulatory capital requirements in multiple jurisdictions.

Frequently Asked Questions

What is the refinancing rate for 2024 CMBS loans?

The refinancing rate for 2024 CMBS loans is about 85%, a decline from 94% in 2023.

How many loans matured in 2024 according to KBRA?

A total of $56.2 billion in loans across 1,807 loans matured in 2024.

What challenges are faced in refinancing larger loans?

Larger loans generally face greater refinancing difficulties compared to smaller loans, resulting in lower payoff rates.

What is the significance of the $100 billion issuance?

The $100 billion CMBS issuance is a milestone not achieved since the global financial crisis, highlighting current market conditions.

How does KBRA contribute to the financial market?

KBRA acts as a credit rating agency that provides valuable ratings, aiding investors in making informed decisions in structured finance.

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Disclaimer: The content of this article is solely for general informational purposes only; it does not represent legal, financial, or investment advice. Investors Hangout does not offer financial advice; the author is not a licensed financial advisor. Consult a qualified advisor before making any financial or investment decisions based on this article. The author's interpretation of publicly available data presented here; as a result, they should not be taken as advice to purchase, sell, or hold any securities mentioned or any other investments. If any of the material offered here is inaccurate, please contact us for corrections.