TRD Insights: Multifamily loan maturities will jump to $128B by 2025

The wall of maturities would be up from $73B expected by end of this year, according to data CBRE analyzed

New York /
May.May 19, 2020 08:00 AM
(Credit: iStock)

(Credit: iStock)

A recent analysis found an estimated $73 billion in multifamily loans will mature this year, up nearly 12 percent from 2019.

But that total pales in comparison to the expected multifamily loan maturities over the next five years, according to the data from CBRE’s analysis of Trepp and Mortgage Bankers Association.

In 2021, maturities will reach $83 billion, and they will keep rising, peaking in 2025, when $128 billion in multifamily loans will mature.

Loan maturities drive investment and financing activity because they often push borrowers to sell assets, seek new financing or refinance their original loans to avoid default.

Maturities during economic crises like the coronavirus can heighten the risk for multifamily borrowers and lenders, however. These events often send multifamily operating incomes tumbling, which may make it harder for borrowers to obtain loan modifications or refinancings and may increase their default risk.

Lenders also typically raise underwriting standards during financial crises, only issuing loans secured by assets with solid net operating incomes and loan-to-value ratios.

A silver lining is that the biggest multifamily lenders are fairly well-capitalized, and may be able to absorb substantial losses related to defaults on loans.

Banks and government sponsored entities such as Fannie Mae and Freddie Mac originated the bulk of multifamily loans maturing over the next decade. Banks’ “loss-absorbing capacity” reached historically high-levels at the end of 2019. That allowed them to continue lending despite the coronavirus pandemic-related shocks the market is now experiencing, according to a report last week the Federal Reserve published on the stability of the U.S. financial system.


Related Articles

arrow_forward_ios
Canada, South Korea, Germany, Singapore, and the UK top the list of countries investing in real estate. (Getty)
South Korea now No. 2 foreign investor in US CRE
South Korea now No. 2 foreign investor in US CRE
(iStock/Illustration by Alexis Manrodt for The Real Deal)
Manhattan job losses in Q3 worst of any large county in the US
Manhattan job losses in Q3 worst of any large county in the US
R&B Realty's Aron Rosenberg and Maverick's David Aviram of Maverick with 28 West 36th Street and 32 West 39th Street (Google Maps)
Midtown landlord sues to stop foreclosure by Maverick
Midtown landlord sues to stop foreclosure by Maverick
HSBC COO John Hinshaw (Getty, iStock)
HSBC to shrink its office footprint amid shift to WFH
HSBC to shrink its office footprint amid shift to WFH
(iStock)
US hotel market had worst year since the Great Depression
US hotel market had worst year since the Great Depression
(iStock/Illustration by Alexis Manrodt for The Real Deal)
Emerald Equity siphoned security deposits at now-bankrupt buildings
Emerald Equity siphoned security deposits at now-bankrupt buildings
New Yorkers can enjoy going to the movies again on March 5. (iStock)
Showtime: NYC movie theaters to reopen
Showtime: NYC movie theaters to reopen
Fisher Brothers partner Kenneth Fisher and 605 Third Avenue (Photos via Getty, Fisher Brothers/Illustration by Kevin Rebong for The Real Deal)
What tenants pay Fisher Brothers & JPMorgan at 605 Third Avenue
What tenants pay Fisher Brothers & JPMorgan at 605 Third Avenue
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...