Trepp Research: Shifting Retail Landscape Poses Big Questions for CMBS Borrowers and Lenders

Share Article

Trepp has released a new report on the commercial retail property sector and how changes in the marketplace will raise important questions for CMBS borrowers and lenders.

Wave of Retail Maturities

Retail borrowers will have to refinance or sell in a completely different environment than the one they borrowed in ten years ago.

Trepp, LLC, the leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets, has published new research on the commercial real estate retail property sector and how changes in the marketplace will raise important questions for CMBS borrowers and lenders.

“Retail loans back over 30% of all public conduit CMBS collateral, just below office but well above all other property types”, said Joe McBride, Research Associate at Trepp. “No other major property type has seen so much change in the last few years. The underlying fundamentals of brick and mortar retail are shifting due to technology and changing consumer appetites. Owners are looking to shed underperforming properties and pump money into high performing assets.”

The Trepp report features historical performance breakdowns for retail loans in CMBS, as well as occupancy, issuance, and amortization totals for the property type. Delinquency rates have settled down across the board since the financial crisis, but retail loans recovered more rapidly than other major property types. The current delinquency rate for retail loans is just 5.51%, second only to lodging loans. Issuance, on the other hand, has been trending upward since the recession, as more single asset/single borrower deals are originated.

Adding to the changing landscape of retail properties are trends such as the “wave of maturities.” This wave refers to the $300 billion of 2005 through 2007 vintage CMBS loans maturing in the next three years. Retail loans represent nearly 30% of the wave’s maturing balance each year. Loans that are current now may end up defaulting as they near maturity and borrowers assess their sale or refinance options.

McBride adds that “as the majority of boom era loans mature in the coming years, retail borrowers will have to refinance or sell in a completely different environment than the one they borrowed in ten years ago.”

A complimentary copy of the report can be downloaded at http://www.trepp.com/knowledge/research. For daily CMBS and commercial real estate commentary, follow @TreppWire on Twitter.

About Trepp LLC
Trepp, LLC, founded in 1979, is the leading provider of information, analytics and technology to the CMBS, commercial real estate and banking markets. Trepp provides primary and secondary market participants with the web-based tools and insight they need to increase their operational efficiencies, information transparency and investment performance. Trepp serves its clients with products and services to support trading, research, risk management, surveillance and portfolio management. Trepp is wholly-owned by dmg b2b a division of the Daily Mail and General Trust (DMGT).

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Joe McBride
Trepp
+1 212-754-1010
Email >
Visit website