Only 52% of CMBS Loans Maturing in July Have Refinanced

A total of 52% of the $1.8 billion of CMBS loans that matured in July were refinanced, according to analysis by Barclays Capital. That's in line with the 53% refinance rate for the $9.5 billion of loans that have matured so far this year and indicates that borrowers continue to have difficulties lining up take-out financing.

Further evidence of the refinancing difficulties is the increasing volume of loans that remain outstanding even three months after their maturity. According to Barclays analysis, only 51% of the loans that matured in January had been refinanced by the end of February. Three months later, that percentage had grown to 76%. But only 53% of the loans that matured in April had been refinanced three months later.

The lower a loan's debt yield, the more difficult it is to refinance, according to Barclays findings. Debt yield, or exit yield is determined by dividing a property's cash flow by its loan's balloon balance. The higher the number, the better prospects a loan would have of getting refinanced.

Barclays found that only 34% of loans with debt yields of less than 10% have refinanced. And that bodes poorly for the CMBS market, given that the average debt yield for loans in the CMBX series of indices is only 9.7%, according to a Barclays estimate based on most recent available net operating income figures.

Even loans with very high debt yields are having a tough time. Loans with debt yields of 20% or more have an 83% refinance rate. Meanwhile, loans with debt yields of 10% to 15% had a 61% refinance rate, while loans with debt yields of 15% to 20% had a 68% refinance rate.