Only 11% of the $755M in office CMBS loans that matured in September were paid off, with roughly half of the remaining debt securing extensions from special servicers.
It was a paltry payoff rate even compared to the 31% rate for the year through September, according to Moody’s. And it was a sign of the times.
Property owners are avoiding transacting in today’s market, instead carrying forward the year’s dominant strategy of securing short-term extensions and other loan modifications as both sponsors and lenders wait for capital conditions to improve.
The widespread practice, commonly referred to as extend-and-pretend, is available today for the owners of the highest-quality assets that can afford to pay the fees to wait for better days, but time is wearing thin for everyone else. For many asset holders, that means the pretending could come to an end in 2025.
RSK: Looks like the chickens are coming home to roost for some office properties as lenders are mostly done with slow pay/no pay.
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- - Volume: 25 - WEEK: 1 Date: 1/1/2025 8:15:32 PM -