Creating a Hybrid Work Friendly Conference Room | ACCESS THE NEW REPORT →

An Upcoming Wave of Debt Maturities Is About to Make It a Lot Tougher for Retail Real Estate

It wasn’t uncommon for borrowers and lenders to extend payment terms or come to other agreements during the height of the COVID-19 pandemic, especially for retail real estate. However, now the pandemic’s impacts are beginning to subside, leaving a stressed economy in its wake, borrowers who are having the most trouble paying off that debt will need to make some hard choices about what to do in 2023.

In a matter of months, loans secured by commercial mortgage-backed securities for 2,583 retail properties totaling 127 million square feet will mature. 10.5 percent of that square footage (accounting for 8 percent of the total property count) are secured by properties that are reportedly more difficult to refinance as their occupancy rates stoop below 90 percent. Coupled with the fact that the Federal Reserve is showing no signs of slowing down their interest rate push, a lot of those owners can expect a bumpy financial ride.

Many landlords had the foresight to restructure their debt and postpone maturities, but others who didn’t are now faced with a sizable pool of properties with high vacancy rates and financing difficulties. That said, owners who have a steady stream of tenants will probably be able to refinance out of debt without needing a big infusion of cash.

Image - Design