Research - NOVEMBER 18, 2014

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Report: CMBS payoff rate to dip in 2015

by Reg Clodfelter

The payoff rate for loans backing CMBS could dip to between 65 percent and 70 percent in 2015 and dip below 52 percent by 2017 as the fundamentals backing maturing loans continue to weaken, according to Morningstar Credit Ratings. The payoff rate for 2014 is projected to come in between 70 percent and 75 percent by year’s end.

Morningstar has valued 84.5 percent of the $70.14 billion of performing loans set to mature in 2015, and expects 30 percent to 35 percent will not pay off on time as 34.3 percent of the loans maturing in 2015with a total unpaid principal balance of $24.03 billion have loan-to-value ratios greater than 80.0 percent.

According to the report, Morningstar’s historical analysis indicates that an 80 percent LTV threshold is a reliable barometer of a loan’s likelihood to successfully pay off on time. Morningstar also anticipates that these loans will have a tough time refinancing.

Loans secured by office properties wi

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