OVER LEVERAGED FINANCING FRENZY LOANS STARTING TO MATURE in TIGHT CREDIT MARKETS APARTMENTS CLASS HAS HIGHEST PROSPECTS FOR SUCCESS
Prospects Dim for Take-Out Financing on 2012 Loan Maturities
Over the next 12 months, CoStar is expecting $100 billion in loans Of that amount, $70 billion is coming due for the first time, and another $30 billion in loans is delinquent but rolling on a monthly basis past their maturity date.
2012 will also usher in the first major wave of maturities from the 2007 vintage, which were issued during a frothy period at the peak of the market."
However, prospects appear dimmer for borrowers trying to find take-out financing for these loans in 2012,
according to bond rating agencies
"The retrenchment in the capital markets and among other lenders in the third quarter of 2011, which has
continued into the current quarter, dims the refinancing prospects for loans maturing next year," Kay said.
Kay estimates that 50% to 60% of the 2007 vintage five-year-term loans maturing next year may fail to refinance, and retail loans are at the greatest risk.
Moody's also said that the balloon refinancing risk is material for 2006-2008 vintage loans.