A dearth of refinancing options for European CMBS loans will not be covered entirely by new entrants as long as they focus exclusively on higher-quality properties, according to a commentary released today by Fitch Ratings.

This could lead to further downgrade pressure.

The agency said that over 70% of EMEA CMBS loans maturing in 2012 have not been repaid, with only 24 out of 122 loans coming due in the first 11 months fully paying at maturity. “A further 12 were fully paid after maturity…one was repaid following a [reps and warranty] breach,” Fitch said. The remaining properties are experiencing either workouts (31), standstill (29), or maturity extension (20).

The agency added that the lack of refinancing channels is expected to hold for next year and 2014, as the arrival in the property market of senior debt funds raising equity and large insurance companies has not brought in enough capital to offset banks’ exit from the sector.

“The approach of CMBS legal maturities will intensify the pressure on servicers working out loans, making forced sales more likely and potentially pushing down prices further,” Fitch said. A total balance of €16.2 billion ($20.9 billion) in loans maturing in EMEA in 2013 and 2014 have to resolved within three years of loan maturity.

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