$16B In NYC Commercial Real Estate CMBS Debt Is Coming Due This Year
More than $16B in loans backed by New York City commercial real estate are set to mature this year, including a number of high-profile office buildings.
The amount of debt maturing in 2023 is 30% higher than last year’s $12.7B worth of maturites, per Trepp data reported by The Real Deal. The jump is attributed to the fact many opted to extend loans through the tumult through the last three years, and while many loans have the option to extend once again the current economic climate means lenders may not automatically grant them.
Three of the five largest office loans set to mature in the next 20 months are in New York City, according to Trepp. The Seagram Building, owned by Aby Rosen’s RFR Holding, has a loan of $783M maturing in May. The building is 75% occupied, by stairs. Tishman Speyer’s 300 Park Ave. has a $485M loan coming up in August and is 81% occupied. In August 2024, The Stahl Organization’s $750M loan for 277 Park Ave. matures, and anchor tenant JPMorgan Chase is building a new supertall tower for itself across the street.
The maturities are hitting amid a challenging capital markets climate — the Federal Reserve raised its benchmark interest rate from 0.25%-0.50% in March to 4.25%-4.5% in December, making it more difficult for owners to refinance their loans.
The increases have slowed transactions, killed deals and pushed down prices; Commercial property prices had dropped nearly 13% as of November from a peak earlier in 2022, per Green Street data.
Lenders have been largely patient with borrowers through the pandemic, opting to grant forbearance or extensions in many cases, but some have predicted this year will bring more conclusive action for many owners with underperforming assets.
“There’s no more extend and pretend,” Michael Cohen, founder of the CMBS workouts shop Brighton Capital Advisors, told TRD. “I can tell you that with 1,000 percent certainty.”
With mounting economic pressures around the globe, roughly $175B in commercial loans are already in distress, according to a Bloomberg analysis. In 2023, that number is expected to rise.