NEW YORK--(BUSINESS WIRE)--Most of the $16.4 billion in Fitch-rated, non-defaulted commercial mortgage loans with 2014 maturities will refinance. Approximately $15.4 billion of these loans have reported year-end 2012 financials and we estimate that 86% will be able to refinance at market-level refinancing rates.
Of the maturing loans with reported financials, the majority ($9 billion) had balances of $30 million or less. Forty-five loans or $4.6 billion have balances greater than $50 million. The weighted average coupon is 5.65%; if current market rates stay between 5.00% and 5.25%, refinancing is likely.
We do not expect the likely reduction in monetary stimulus to have an impact on these loans' refinancing prospects if it progresses at a reasonable pace. However, if the reduction proceeds more quickly (or has a bigger impact) than the market expects, instability could arise and refinancings may slow.
The next wave of loan maturities is scheduled between 2015 and 2017 whereby $188 billion is set to mature. Some of these loans may have a more difficult time of refinancing without additional borrower equity as the leverage was higher than previous years and there was less amortization.
To calculate these estimates, we assumed a current market mortgage rate of 5% and a 30-year amortization schedule. We assumed loans that achieved a stressed debt service coverage ratio of at least 1.25x would be able to refinance.
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