Hard Refinance as New York City Mature CMBS Raised

(Photo by Kevin Cifuentes for The Real Deal with Getty Images)

Commercial mortgage foreclosures are on the rise in New York City as high interest rates and a depressed economy make refinancing a challenge. read a lot.

More than $16 billion in loans approved by the New York City business community is set to mature this year, according to data from Trepp. That’s nearly 30 percent more than the $12.7 billion it had to pay last year.

This increase in maturity is in part due to borrowers kicking the can down the road in the last three years by taking advantage of additional facilities on their loans. But that savior may never be found again.

According to Trepp’s Manus Clancy, although a large part of those loans have matured with additional opportunities, borrowers can no longer take for granted that lenders will accept their requests.

“It’s not a slam dunk,” he said, explaining that lenders may delay lending on distressed properties.

Major loans due this year include a $783 million mortgage Aby Rosen’s Seagram House and a $485 million loan Tishman Speyer’s 300 Park Avenue.

With the Fed raising interest rates to combat inflation, property owners are facing a harsh reality. Any new debt they take out will cost more than the loans they replace. At the same time, the danger of the recession is that many users – such as rental agencies and hotel guests – pull back, which causes property prices to fall.

Many owners on the day of their refinancing see two unpleasant options: walk away or send good money when it’s bad.

And although offices have received a lot of attention, it is not the only type of property that is struggling. Some of New York City guest house go inside recorded in 2022, and more country house just arrived under stress.

“We’re starting to see a lot of bad news for families,” said Xander Snyder, a senior executive at insurance company First American Financial Corporation.

Snyder said that with the CMBS market slowing, other lenders including mortgage REITs and credit unions are stepping in to refinance properties, albeit at a higher cost.

“It always affects revenue, there’s no way to avoid it,” he said.

For many struggling borrowers, 2023 may be the end of the line.

Michael CohenCMBS was established training store Brighton Capital Advisors, said that many office buildings that have matured this year have short leases, as a result of the tenants’ reluctance to commit to their offices for a long time.

The hotels that came to the beginning of the disease were made by expanding their loans and investing in reserves that are no longer useful. According to Cohen, the days of putting Band-Aids on transactions are over.

“There is no more expansion and pretense,” he said. “I can tell you with 1,000 percent certainty.”

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