Wave of debt maturity presents opportunity to untraditional lenders

June 08, 2012 11:00AM

The immense volume of debt due to mature over the next five years presents an exciting opportunity for mezzanine funds and preferred equity lenders, which will be able to swoop in and provide “rescue capital” to flailing borrowers in the absence of interest from traditional banks, according to GlobeStreet.com.

While banks have been lending more willingly than they had during the depths of the recession, their attitude towards maturing debt will likely depend on the financial strength of a given building’s sponsor.

That leaves the door open for private equity funds, which have already raised close to $160 billion in funds to take advantage of the tremendous amount of debt maturity opportunities, GlobeStreet.com said. At least $232 billion in commercial mortgage backed securities originated in 2007 is expected to mature in the next few years.

In New York, refinancing has already begun. The $113 million refinancing of William Beaver House at 15 William Street in Lower Manhattan, which was arranged by Cassidy Turley on behalf of CIM Group, came from an unlikely source — an insurance giant.

“It’s an opaque market,” said Yon Cho, principal of real estate finance and investment firm PCCP. “You don’t really know who’s going to step up at what time.” [GlobeSt.com]