In October, 60.7% of CMBS loans reaching their balloon date paid off, according to the Trepp Oct. 2012 payoff report.

The Trepp Sept. 2012 report saw 68.2% of the loans payoff. This was the highest payoff level since December 2008.

“Considering that the payoff level has only surpassed the 60% threshold three times prior to October, this month's reading is impressive,” analysts said in the report. “In August, we predicted that the payoff rate could trend upward in the coming months.”

By loan count (as opposed to balance), 59.7% of loans paid off. On the same basis, the 12-month rolling average is now 54.1%. According to the report since 2009, there have only been six months in which more than half of the balance of loans reaching their balloon date actually paid off.

Payoffs have been more prevalent in earlier vintages, rather than 2006 and 2007, because these loans were made with lower leverage and more reasonable valuations.  

“The makeup of the underlying pool is clearly a consideration; loans from 2004 will have a much better chance of paying off on time than loans from 2007,” analysts said. “However, renewed confidence in the CMBS market should make investors take a fresh look. With new issue CMBS spreads at their tightest levels in four years, and with the Treasury curve near historic lows, more loans should be refinanceable now than at any time since 2008.”




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