For the most part, legacy CMBS debt has matured. Ten-year loans issued in 2007 accounted for the majority of the maturity waive, registering 69.2 percent ($1.70 billion) of the maturing unpaid balance according to TREPP. TREPP further reports that of the almost $12.8 billion of CMBS loans to mature in 2018, 80 percent will payoff as scheduled. So, if it’s over, is there anything left? You bet.
It’s what’s behind the scenes that’s interesting. REO’s of the top servicers (LNR, CIII and CWCapital) likely top over $8.8 billion with another $500 million from smaller servicers, with little fees to be gained and no funds for property improvements. These assets are not currently seen, but will likely hit the auction platforms or traditional brokerage markets over the next 12 to 18 months like we have never seen before. If you understand the motivations of the servicers and ultimately the Trust, there are profits to be made for owners and investors alike. If you lost an asset to foreclosure, you might want to look again to purchase it back. As the need for well-located product continues to rise and investors miss out on opportunities, legacy CMBS might become the next new trend.
Tanya Hart Little is the Founder and CEO of Hart Advisors, a real estate consulting firm specializing in CMBS restructures, assumptions and capital placement. You can reach Tanya at [email protected].