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$1.4 trillion in commercial real estate debt is expected to roll over during the next three years

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Washington Post February 19, 2010: Unlike residential mortgages, which often can be paid over 30 years, commercial real estate mortgages typically must be paid off or refinanced within five years. Commercial properties mortgaged in 2005, 2006 and 2007, at the height of the boom, are reaching their maturity date. "Do the math on this," Warren said. "This is a significant problem."

Nationwide, at least $1.4 trillion in commercial real estate debt is expected to roll over during the next three years. Warren said that half of commercial real estate mortgages will be underwater by the beginning of 2011. A fifth of residential mortgages are underwater now, she said.

Unlike residential mortgages, which often can be paid over 30 years, commercial real estate mortgages typically must be paid off or refinanced within five years. Commercial properties mortgaged in 2005, 2006 and 2007, at the height of the boom, are reaching their maturity date. "Do the math on this," Warren said. "This is a significant problem."

 

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1 response to “$1.4 trillion in commercial real estate debt is expected to roll over during the next three years”

  1. Jonathan Price Says:
    It is more or less the same situation in the UK as well adjusting the numbers for the smaller size of the economy. Whether it becomes a real issue depends on what the banks do. so far they have held off realising losses and have been very forgiving on loan to value covenant breaches where interest payments are current. Instead of calling in loans they have chosen to charge fees for amending covenant terms and have hiked margins. On the same reasoning they are likely to roll over these mortgages as they mature, but at higher fees and margins.