Cohen Financial's Taft

ARE THIS YEAR’S MATURING LOANS MANAGEABLE?

Last week’s GlobeSt.com Quick Poll asked readers if this year’s maturing commercial real estate loans are manageable. A total of 84% of voters responded that they are not, and indicated that the industry will suffer as a result. Howard Taft, managing director for the Miami office of Cohen Financial, says he is seeing first hand the challenges the industry is already facing.

“I firmly believe maturing loans will definitely make the industry suffer. We are seeing class A properties with good NOIs that are trying to refinance existing debt originated seven to 10 years ago that is now maturing and owners are not able to refinance. The original loans were closed for approximately 75% to 80% of value of the property at the time. Today’s stringent underwriting criteria, together with lower loan to value requirements and fewer lenders in the market, are contributable factors for the reduced loan amounts for the same properties–in some cases, 20% to 30% below the current debt.