According to Standard & Poor's 2012 CMBS outlook, as much as 63% of $19 billion in 2007 vintage five-year CMBS loans coming due in 2012 could fail to refinance in case borrowers are not willing to put in additional equity. The rating agency bases its estimate on the $13.3 billion of these five-year CMBS loans for which S&P has adequate net operating income data. Based on this balance, S&P expects about $7 billion to $8 billion of 2007 vintage loans to face refinancing difficulties.

S&P has come up with the 63% estimate using a maximum LTV limit of 70% for refinancing. Pushing up the LTV limit to 80%, the rating firm sees a reduced level of about 52% of the 2007 vintage loans having refinancing issues.

And extrapolating the estimated 60% and 50% finding to the entire $19 billion in five-year loans coming due, the rating agency estimates that as much as $11 billion of these loans may be unable to refinance.

The rating agency reported that one-third of these maturing loans from 2007 are backed by office properties that typically have five-year leases. This means the leases are likely to be renewed at reduced rents, and if tenants don't renew their leases it may be difficult to find long-term lease commitments in today's environment. And retail loans, which have the highest LTVs, are at the most risk for not being able to refinance.

S&P expects that this inability to refinance could result in more than $4.5 billion in new CMBS delinquencies for 2012. Even then S&P expects that "modest improvements in property fundamentals and collateral performance should contain any significant increases in delinquencies."

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