CRE Loan Extensions Rise Amid Uncertainty and Higher Rates
Year to date, about $5.65 billion in commercial real estate loans have been modified with an extension, according to Trepp. Although the term increase varies from loan to loan, the largest share of these extensions, 37%, was for term increases of 1-12 months.
That said, more than 20% of modified CRE loans have gone for extensions of 37 months or more, Trepp reported. When focusing the TreppLoan search to sort specifically for loans that were modified as a result of the loan reaching its maturity date, a little more than half were extended by 1-12 months.
The year’s largest quarter for loan extensions upon maturity occurred in the second quarter, when $957 million in loans were extended. Trepp’s Jack LaForge cited higher interest rates and concern about the overall health of the macroeconomy as driver of the trend toward modifications.
“No one wants to refinance from a 4% loan into a 7% loan; investors do not want to pay 7% to finance an acquisition; and even if they did, it’s debatable if the markets would finance the purchase,” wrote LaForge.
Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces.
Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications.
Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).