Loan mods inflate 2024’s maturing commercial balances

Hotels have highest share of maturing loans among major property types

Loan modifications have increased the dollar value estimate of maturing commercial mortgages this year by more than 40%, according to the Mortgage Bankers Association (MBA).

Twenty percent of commercial and multifamily mortgage balances are set to mature in 2024, the MBA reported in its latest Commercial Real Estate Survey of Loan Maturity Volumes. The organization revealed the data at its annual Commercial/Multifamily Finance Convention and Expo in San Diego.

That figure equates to roughly $929 billion of the $4.7 trillion in outstanding commercial property loans, a 28% increase from the $729 billion that matured last year. Many of the loans that were originally set to see maturation in 2023 were instead pushed to this year, ballooning the 2024 estimate.

“The lack of transactions and other activity last year, coupled with built-in extension options and lender and servicer flexibility, has meant that many loans that were set to mature in 2023 have been extended or otherwise modified and will now mature in 2024, 2026, 2028 or in other coming years,” said Jamie Woodwell, the MBA’s head of commercial real estate research.

“These extensions and modifications have pushed the amount of [commercial real estate] mortgages maturing this year from $659 billion to $929 billion.”

Some investor groups are set to see a large fraction of the outstanding balances they hold reach maturation this year. For example, 25% of the outstanding commercial property loan balances held by depository institutions — a share that equates to some $441 billion — will mature in 2024. So will 31% of balances (approximately $234 billion) in commercial mortgage-backed securities, collateralized loan obligations or other asset-backed securities, as well as 36% ($168 billion) held by credit companies, in warehouse or by other lenders. On the other end of the spectrum, just 3%, or $28 billion, of outstanding balances held or guaranteed by Fannie Mae, Freddie Mac, the Federal Housing Administration or Ginnie Mae are set to mature this year.

When it comes to property types, hotels have the largest share of loans coming due at 38%, followed by 27% of industrial loans and 25% of office mortgages. Just 17% of retail property balances and 12% of multifamily-backed loans are set to mature in 2024.


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