Most of the CMBS loans that are maturing this year and next originated circa 2006-2008, so there is much concern that not all of these loans will be in a position to be paid off or to secure refinancing through traditional lenders because of overleveraging or loose underwriting prior to the recession. In 2016, the payoff rate was down from 80% in 2015 to only 73%, according to Morningstar Credit Ratings LLC. Although the 2017 payoff rate has managed to stay closer to 70% than the 60% that Morningstar predicted at the end of 2016, there are still 25-30 percent of maturing CMBS loans that are having difficulties.

What If You Have a Maturing CMBS Loan that You Can’t Pay Off?

A private capital or hard money lender can be a great resource if you have a maturing CMBS loan against an asset that you don’t want to hold onto for the long term or that doesn’t fit the increasingly strict bank lender requirements for commercial mortgages. A private capital bridge loan can work well for CMBS loans that borrowers expect to increase in value in the short term (one to two years). Private capital loans can be especially helpful if you’ve been trying to refinance your loan through a traditional lender, but it’s coming due soon and your bank loan just isn’t going to close in time to help you out.

What Makes Private Capital Lenders Better?

Private lenders can close in weeks rather than months and typically offer loan terms lasting anywhere from six months to three years. So even if you just need another few months to line up long-term financing, a private capital loan can work well to bridge your financing gap. They can also be useful if an income-producing property’s income stream is lower than it once was (and what the bank lender requires to refinance) and you need some time to reposition or stabilize the property before refinancing or selling it. Private lenders also offer more flexible lending terms and work with you to make sure that your loan works for you rather than forcing you to work for it. In some cases, private lenders will include additional funds for improvements or repairs in their loans, which can help you increase the value of an overleveraged property.

If you need to refinance a maturing CMBS loan with a private capital bridge loan, contact Montegra today at 303-377-4181.