By Ashley Fahey | National Observer: Real Estate Edition
All eyes are on mounting debt in the commercial real estate world, which continues to struggle with higher interest rates, a more cautious lending environment and muted return-to-office and leasing activity in the wake of the Covid-19 pandemic.
Nearly $1.5 trillion in commercial real estate debt is maturing by the end of 2025, Morgan Stanley analysts found this spring.
The Business Journals recently examined properties nationally that secure debt in commercial-mortgage backed securities (CMBS) loan portfolios, obtained via financial filings with Bloomberg, to pinpoint which metro areas will see the most CMBS debt maturing by the end of 2024 — and could face disproportionate challenges at refinancing, given current economic pessimism.
Perhaps unsurprisingly, major gateway markets are carrying the most CMBS debt maturing within the next 18 months, with New York topping the list (at about $39.8 billion), followed by Los Angeles ($17.9 billion), Miami ($12.6 billion), San Francisco ($11.4 billion) and Las Vegas (nearly $10.6 billion).
Phoenix ranks 11th among the Top CMBS Debt Markets at about $6.5 billion.
The analysis examined all commercial real estate property types financed with CMBS debt and loans current on payments, as well as those marked by loan servicers as facing some amount of distress.
When filtering to look at only distressed loans — ones on loan servicer watchlists or in special servicing or marked as delinquent, in foreclosure, bankrupt or matured and nonperforming — set to expire by Dec. 31, 2024, a similar picture emerges.
New York has 149 CMBS loans facing distress that have a collective outstanding balance of $2.6 billion, followed by 79 loans with a total balance of $1.5 billion in Chicago and 134 loans with a balance of $1 billion in San Francisco.
To be sure, the CMBS market represents only a fraction of commercial real estate distress and loans maturing in any given metro area.
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