Nearly 100 commercial mortgage-backed securities, or CMBS, loans are coming due over the next two years in New York City, forcing those real estate borrowers to find financing in a far more difficult lending environment than when the notes were written.
In the city, there are 52 such commercial real estate loans expiring in 2009 and 43 in 2010, according to Manhattan-based financial analytics firm Trepp. Such loans are typically held for five years, but neither the terms nor the additional information on the 95 securities was immediately available.
In 2009, refinancing will be needed for $2.6 billion in fixed-rate loans and $4.5 billion in floating rate loans, while in 2010, $3.6 billion in fixed-rate loans and $271 million in floating rate loans will need to be refinanced, according to Trepp.
The borrowers will likely have to pay higher interest rates as well as contribute equity — or seek out expensive mezzanine lenders to provide that equity — because lenders are underwriting loans at lower loan-to-value ratios.
“The amount of money available for lending for real estate is a small fraction of what it was over the past few years,” said Craig Evans, senior managing director for institutional investment sales at Colliers ABR. “A huge amount was done through the CMBS market, which is not functioning now.”
With the commercial mortgage-backed securities market frozen, he said borrowers would more aggressively seek out alternatives to the CMBS market, including banks and life insurance companies that do not appear to have the ability to deliver the volume of funding required at present.