Bills Coming Due on Commercial Real Estate Debt
The commercial real estate market is anticipating a record number of maturing loans, which will boost the chances of a surge in defaults, the Wall Street Journal reported.
NEW YORK – Data firm Trepp reported that last year $541 billion in debt backed by office buildings, hotels, apartments and other types of commercial real estate came due, which was the highest amount ever for a single year.
A record amount of maturing loans could increase defaults as property owners are forced to refinance at higher rates. Trepp added that between now and the end of 2027, $2.2 trillion in commercial-debt maturities are expected to come due, the Wall Street Journal reported.
Commercial-property loan losses are rising for lenders, and Fitch Ratings expects the delinquency rate for commercial mortgage loans that have been converted into securities to increase to 4.5% in 2024 and 4.9% in 2025, more than double the 2.25% rate in November 2023. Fitch added that retail, hotel and office delinquencies are all expected to increase.
Source: Wall Street Journal (01/16/24) Grant, Peter
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