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Loan Extensions Reach New Highs At $384B

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Lenders are continuing to extend loans, with $384 billion now set to carry over into 2025. This figure surpasses the $270 billion in loan extensions recorded for 2024, according to data from the Mortgage Bankers Association (MBA).

According to Aaron Jodka, research director for capital markets at Colliers, loan extensions now make up 40% of debt maturing this year. Colliers estimated this based on the MBA’s 2024 loan maturity report. While the analysis isn’t exact—since loans can be refinanced, renegotiated, or newly issued—it highlights the growing trend of loans not being paid off upon maturity.

Commercial Mortgage-Backed Securities (CMBS) and banks are the most likely to extend loans, Jodka noted. Of the CMBS loans maturing in 2025, 54%—equivalent to $125 billion—were initially due in previous years. Similarly, 44% of bank loans, or $199 billion, were carried over from past due dates. In contrast, life insurance and agency loans were largely paid off, reducing total maturities by $8 billion.

Multifamily, office, and alternative asset classes, such as self-storage and manufactured housing, are the top recipients of loan extensions. Office loans accounted for $85 billion in extensions, or 45% of the $187 billion in 2025 maturities. Multifamily properties had the largest extension volume at $97 billion, roughly one-third of the $310 billion in loans set to mature in 2025. Other assets saw extensions totaling $87 billion.

Among asset classes, industrial properties had the highest percentage of 2025 maturities carried over from prior years, with 55% being pushed forward. Given the sector’s strong fundamentals and high transaction volume, this trend is seen as a logical approach.

Jodka anticipates that a significant portion of 2025 maturities will be further extended into 2026 or beyond.

“Lenders are adjusting to market conditions and pricing shifts by forcing sales, initiating foreclosures, and exploring alternatives beyond loan renegotiations,” Jodka stated. “Still, $957 billion in loans will not be paid off this year, and a substantial portion will be deferred to 2026, when another $663 billion in loans come due.”

 

Source:  GlobeSt.

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More CRE Debt Is Maturing This Year Than Estimated Earlier

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The Mortgage Bankers Association has revised upward its estimate of debt maturing in 2024.

Because of the number of extensions and modifications that lenders have been granting borrowers in the past few years, the amount of CRE mortgages maturing this year is expected to increase from $659 billion to $929 billion.

“The lack of transactions and other activity last year, coupled with built-in extension options and lender and servicer flexibility, has meant that many loans that were set to mature in 2023 have been extended or otherwise modified and will now mature in 2024, 2026, 2028 or in other coming years,” said Jamie Woodwell, head of commercial real estate research at MBA.

This new estimate expands the universe of potential distress that could enter the market. At the same time, though, the increase in maturities this year could also have the unexpected consequence of generating more price transparency in the market. The uncertainty surrounding interest rates and questions about property values and fundamentals have led to fewer sales and financing transactions. However, the mortgages due to mature in 2024 and clarifications in other areas should help break up congestions in the markets.

The CRE loans maturing this year vary both by investor type and property type. For instance, just $28 billion, or 3 percent, of the outstanding balance of multifamily and healthcare mortgages either held or guaranteed by Fannie Mae, Freddie Mac, FHA, and Ginnie Mae will mature in 2024. In addition, life insurance companies will see $59 billion, 8 percent, of their outstanding mortgage balances mature in 2024. However, $441 billion, or 25 percent, of the outstanding balance of mortgages held by depositories; $234 billion, 31 percent, in CMBS, CLOs, or other ABS; and $168 billion, 36 percent, of the mortgages held by credit companies, in warehouse, or by other lenders, will mature this year.

In terms of property type, 12 percent of mortgages backed by multifamily properties will mature in 2024. Also, 17 percent of mortgages backed by retail and 18 percent backed by healthcare properties will mature this year. In addition, 25 percent of loans backed by office properties will come due in 2024. Finally, 27 percent of industrial loans and 38 percent of hotel/motel loans will mature this year, as well.

 

Source:  GlobeSt.

 

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