The Real Deal New York

Property owners in NYC and other prime markets drive debt repayment

Borrowers paid $17B ahead of schedule in the last year
July 01, 2014 12:40PM

As 10-year debt from the peak years of the housing boom comes due, landlords are paying off a larger chunk of loans early than they have in recent years.

U.S. property owners have paid off $17 billion of debt ahead of schedule in the last year, Bloomberg News reported. That is four times the amount of debt owners retired early in 2011 and 2012 combined, according to Credit Suisse Group.

Many of those early repayments are on debt backed by prime properties, Roger Lehman of Credit Suisse told Bloomberg. In the country’s largest markets, real estate values have surpassed the pre-crisis high by 7 percent. Major markets, including New York and San Francisco, are seeing prices outpace those in small municipalities.

A variety of investors are putting money into real estate as today’s low interest rates yield little return, Bloomberg reported. Massey Knakal recently told Crain’s it expects the volume of commercial backed mortgages to expand to $105 billion nationwide.

“Financing has improved quite a bit, giving borrowers more options,” Lehman told Bloomberg. [Bloomberg News] — Tom DiChristopher