Five Years After Market's Peak, Defensive Refis Grow - Finance - Multifamily Executive Magazine

Nearly five years ago, the commercial mortgage-backed securities (CMBS) industry was booming and on the cusp of a peak year.

In 2007, nearly $230 billion in CMBS was issued as the commercial real estate markets soared. But the day of reckoning is expected to come next year, when a slew of five-year balloon loans made at the height of the market will soon start coming due.

And after next year, longer-term 2007-vintage CMBS loans are set to mature, leaving many owners to restructure, recapitalize, and plug some gaps in the capital stack. A huge increase in demand for structured-finance products like bridge, mezzanine, and preferred equity is expected over the next few years.

“We’ve all seen the charts regarding maturities scheduled between now and 2017—it’s like a hockey stick,” says Kevin Smith, who leads the Alternative Capital Division of New York–based Centerline. “There’s going to be a huge need for bridge capital and preferred equity or mezz where the deals can support it.”

Read more...Five Years After Market's Peak, Defensive Refis Grow - Finance - Multifamily Executive Magazine