Barclays analysts anticipate that the securitization market can readily absorb the approximate $48 billion of CMBS loans set to mature in 2014.
The loans maturing in 2014 are mostly 10-year in duration from the 2004 vintage. According to a Barclays securitization report, almost 70% of the loans show debt yields north of 10% and another 20% are reporting yields in the 8% to 10% area.
“Debt yields characteristic on these assets, while somewhat weaker than 2013 maturities, are still strong enough for most loans to pay down successfully,” said analysts in the report.
For loans that matured over the course of 2013, almost 88% refinanced at or before their maturity date. Another 6% of these loans paid down after a few months. These loans were also ten-year in duration.
However refinancing rates on matuities scheduled for 2015 to 2017 may not be as successful, the analysts warned. These loans, mostly 10-year in duration from the 2005 to 2007 vinatge CMBS deal have significantly weaker characteristics than the 2004 and 2003 vintage deals.
The deals are also maturing when the new Dodd-Frank regulations on CMBS risk-retention are likely to come into effect, which will increase the cost of financing. Barcalys anticpates that 12% of 2005 loans will fail to refinance on time, 195 of 2006 loans and 28% of 2007 vintage loans.
“There is some likelihood that lender debt-yield requirements may also head higher if rates sell off sharply by then,” said Barclays analysts.