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Speed, Value Gap Hamper Restructured Loans

Restructuring a troubled loan can take up to 18 months, though value has improved. Distress is better, but CMBS maturities this year will keep this workout method moving.

By Robert Carr | Updated on February 17, 2012

Though distress in commercial real estate continues to drop, from its peak in March 2010 to about $167 billion today, there’s still a lot of workouts left to do on the horizon. The drop can be attributed to extensions and restructuring, helped out by both improvement in property value and more willingness to close the gap.

However, more stress-filled property years loom ahead, as the volume of commercial mortgage maturities continues to edge up, expected to hit more than $300 billion per year in 2012 and 2013, according to a recent Delta Associates report. The Transwestern-affiliated firm said in the report that maturities will remain elevated, as the prior growth in securitization will give the CMBS sector a majority share of mortgage maturities by 2016-17.

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