CRE staring down $929B of maturities this year 

MBA forecast jumps 40%, but interest rate cuts could spur refinancing, selling

Commercial Sector Staring Down $929B of Maturities This Year

The wall of maturities closing in on commercial real estate this year is taller than previously estimated, but opportunities for owners to combat the wave of distress are better.

Roughly $929 billion in commercial loans are set to mature this year, Bloomberg reported. The projection by the Mortgage Bankers Association is a 40 percent jump from its previous estimate of $659 billion in maturities for 2024.

The increase is due in part to loans extended into this year and other delays pushing back previously scheduled maturations, not new transactions. Almost 20 percent of the country’s outstanding commercial debt is maturing this year.

While that degree of looming maturities is a frightening prospect for property owners, the Federal Reserve is expected to halt interest rate hikes and possibly even cut rates later this year. 

“Volatility and uncertainty around interest rates, a lack of clarity on property values and questions about some property fundamentals have suppressed sales and financing transactions,” MBA’s Jamie Woodwell said in a statement, adding that more clarity “should begin to break the logjam.”

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Selling properties hasn’t been a viable option for many owners because a dearth of activity in the last two years has made it difficult to determine values, especially in the office market. Commercial property prices are down 21 percent since early 2022, according to Green Street, including a 35 percent decrease in office prices.

At the end of last year, there was an estimated $85.8 billion in commercial real estate that was distressed, according to MSCI Real Assets. An additional $234.6 billion was considered potentially distressed.

There’s approximately $4.7 trillion in outstanding debt backed by commercial real estate. ​​Banks hold $441 billion of commercial-property debt due to mature this year.

Holden Walter-Warner

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