A growing number of loans are going past their maturity dates, whether through formal extensions or by
lingering unresolved beyond term. In the latter category, more than $23 billion in CMBS loans now sit past maturity “without payoff, liquidation or extension—up from virtually zero in 2019,” Trepp reported, coining the term “maturity drag” to characterize this stasis.
Although this phenomenon initially occurred in CMBS tied to retail properties emerging from the pandemic, now it’s concentrated largely in the office sector, according to Trepp. Retail, lodging and multifamily loans still are part of the total, but in progressively smaller increments.
Trepp reported that two key performance metrics, namely DSCR and debt yield, underpin delays in loan resolution. The firm determined that “risk is no longer concentrated solely among the weakest loans.
Even stronger performers are becoming more likely to experience delays.”
The role of debt yield is becoming more prominent, while DSCR’s role is diminishing. “Loans with lower debt yields are increasingly prone to lingering, pointing to refinancing constraints as a growing driver of delays, rather than credit quality alone,” according to Trepp.
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