CMBS Global Recovery Continues to Be Slow and Uneven 2007 peak. Furthermore, these data are somewhat biased toward investment property in primary locations. There appears to have been little or no recovery in U.K. secondary and tertiary property values, which likely remain at least 40% below their 2007 peak. Outside of Germany, we do not expect prices to improve in the short term. CMBS Loan Refinancing Remains Challenging Two of the heaviest vintage maturity years, particularly in Germany and the U.K., are 2013 and 2014. By contrast, the U.S. has its CMBS loan maturity profile skewed during the 2015-2017 period, as U.S. CRE loans tend to have longer maturities (about 10 years) than their European counterparts (five to seven years). By asset class, office has the largest amount of loans maturing over the next couple of years, followed by retail and multifamily. CRE Finance World Autumn 2013 32 In the first half of 2013, 105 loans were scheduled to mature in the European CMBS transactions that we rate. Only 41 (39%) repaid in full, 32 (31%) defaulted/repaid at a loss, and 12 were extended (11%). The remaining 20 (19%) are either in standstill (five), were restructured (one), or we are awaiting information on their status (14). We anticipate that the loans in standstill will be further extended or will default, depending on servicers’ decisions. European CMBS loan maturities refinancing will remain challenging in the short term, as funding remains scarce due to stricter underwriting standards and reflecting the large number (€9.7 billion) of maturing loans in 2014 (see Charts 5 and 6). As a result, we expect loan performance to continue to come under pressure in the second half of the year, as loans near their maturity dates and interruptions to cash flow and margin mismatches become more pronounced. I N S U R A N C E R E V I E W & A N A L Y S I S Trusted by the world’s leading lenders I N S U R A N C E C O N S U L T A N T S WITH OFFICES IN NEW YORK AND MIAMI Telephone: (212)336-0816 Lfields@harbor-insurance.com Harbor Group is the premier insurance consulting firm to investment banks, capital market lenders, and commercial banks. For over 20 years, from comprehensive insurance review to advisory services, our seasoned expertise provides prudent, time-sensitive counsel.
CRE Finance World, Autumn 2013
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