Maturities Loom as Private Lenders Fill Void

Almost 20 percent of the country's outstanding commercial debt is maturing this year.  An estimated $929 Billion.  Banks hold roughly 45 percent of 2024 maturities, which represents a quarter of their entire loan holdings. Also staggering, roughly a third of the loans held by CMBS, CLOs, and private credit companies will mature this year.  The below chart breaks down all loan holdings by lender type and maturity year.

 

 

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In total through 2028, $2.81 Trillion of maturities is coming due.  All of this is happening with a 10-year treasury lingering above 4.30% and not expected to fall below 4.0%.  On top of that, the Fed does not seem to have any urgency to lower short-term rates.  Given this environment and all the uncertainties, lenders have become more cautious about underwriting, terms, and property types and markets they will and won't pursue.

 

Isolating the banking market alone, which is hyper-sensitive to their deposits relative to loan holdings, below are a few, historically competitive, who are either not quoting or have altogether shut down their balance sheet permanent lending programs for stabilized multifamily:

 

      - HomeStreet Bank

      - Umpqua Bank

      - Kinecta Federal Credit Union

      - Pacific Premier Bank

      - First Foundation Bank

      - Luther Burbank Savings

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With fewer options in the market, lenders have leverage to demand higher spreads and more conservative underwriting.  There are some new bank lenders starting programs that are helping to fill some of the void, but currently not enough to drive spreads to the low/mid-100's as we saw them a few years ago.  Life Companies and REITS are where we are seeing the more competitive spreads for loans $10 million and up.  Our focus generally remains on flexible prepay and pushing leverage through negotiating underwriting assumptions, coverage ratios, and/or utilizing buy-downs.