CMBS loans gaining strength

The commercial mortgage-backed securities market is showing some welcome improvement, according to data released today by commercial tracking firm Trepp. Almost 50 percent of loans in CMBS were paid off before their balloon date — the date at which the loan matures and the remainder of the balance is due. This is more than 10 percentage points higher than the rate seen in June, according to Trepp, and the highest level seen since 2008. Before the recession, the payoff percentages hovered above 70 percent, according to the tracking firm. While this is certainly progress, however, Trepp cautioned against overly exuberant optimism. “This month’s number reinforces the notion that the recovery in commercial real estate lending is still in the embryonic stage,” a spokesperson for Trepp said. “In order to feel truly confident that lending for maturing CMBS loans in gaining traction, we would want to see this percentage exceed 50 percent for a period of three to four months.” TRD