Fitch: Maturing 2014 U.S. CMBS Loans Likely to Refinance

NEW YORK--()--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.

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

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Contacts

Fitch Ratings
Mary MacNeill, +1-212-908-0785
Managing Director
U.S. Structured Finance
1 State Street Plaza
New York, NY
or
Rob Rowan, +1-212-908-9159
Senior Director
Fitch Wire
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Mary MacNeill, +1-212-908-0785
Managing Director
U.S. Structured Finance
1 State Street Plaza
New York, NY
or
Rob Rowan, +1-212-908-9159
Senior Director
Fitch Wire
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com