- Trepp says 57.98% of the $1.41B of CMBS loans reaching final maturity in September paid off on time, up from 51.45% in August and just below the 59.84% trailing 12-month rate.
- Collateral type drove the swing: office loans paid off at 12.79% on $516.9M due, multifamily at 69.49% on only $69.9M, and retail at 89.60% on $514.4M.
- Debt yield predicts outcomes: about 80.6% of loans yielding 12% or more paid off on time, versus 46.3% at 6% to 8% and roughly 25% below 6%, excluding one mall loan.
The CMBS payoff rate looks healthy on the surface, but office is dragging it down: just 12.79% of maturing office loans paid off on time in September, according to Trepp’s Q3 Quarterly Data Review.
Across all property types, 57.98% of the $1.41B that reached final maturity was repaid on time. That compares with 51.45% in August and a 59.84% trailing 12-month rate.
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Office Drags, Retail Soars
Office made up $516.9M across 19 loans, more than 36% of the month’s maturities. That mix alone pulled the total down.
Retail went the other way. Its payoff rate was 89.60% on $514.4M, though a 12-month average of 61.55% shows how choppy the category has been. Multifamily came in at 69.49%, but only $69.9M matured.
Trepp’s point is that the headline rate swings with whatever matures that month. A heavier office mix pushes it down, and a heavier multifamily mix pushes it up.
The Office Loans That Missed
Two office loans totaling $324.5M did not pay off. The larger is the $216.5M senior loan on 540 West Madison in downtown Chicago, a 1.1M SF building with $183.5M of subordinate and mezzanine debt behind it.
That loan moved to special servicing last August after proceeds from a lease termination fee weren’t allocated properly. It carries a 3.23% coupon, a reminder of how far today’s rates sit from the loan’s vintage.
The other is a $108M loan on Salesforce Tower in Indianapolis. The 1.1M SF building is 81% leased with a 12% debt yield, and owner Square Deal Investment Management is working with JLL on a refinancing. A high yield alone doesn’t guarantee a clean exit.
Debt Yield Does the Sorting
Even so, debt yield was a strong predictor in September. Among loans yielding 12% or more, 80.63% by balance paid off on time. For loans between 6% and 8%, the rate was 46.34%.
Loans below 6% show a 65.89% payoff rate, but that’s inflated by the $165M Briarwood Mall loan in Ann Arbor, Michigan, whose 4.82% yield didn’t stop it from being repaid. Strip it out and the rate for that group falls to 25.13%.
It isn’t clear yet whether the mall’s Simon Property Group venture lined up new financing or paid off the loan from other sources.
Payoffs Often Come Late
September’s figure will probably improve. Refinancings and sales often close after the maturity date, so rates typically climb in the months that follow.
Last February’s $2.16B of maturities, for example, started at 45.81%, rose to 52.61% by May and reached 53.58% in August.
Why It Matters
Office is where the stress concentrates. Trepp’s monthly office payoff rates from June through September ranged from 12.79% to 27.64%, well under the overall pace.
The pattern fits Newmark’s finding that lenders are shifting from extending troubled loans toward recognizing losses, as covered in CRE Daily’s look at the maturity wall. Low-yield loans are the ones that need extensions, equity or a resolution.
Rates add pressure. CRE Daily reported that the 10-year yield reached 5.3% on Oct. 1, its highest since 2002, which cuts the proceeds a new loan can provide.
What’s Next
Watch whether 540 West Madison lands a modification and whether Salesforce Tower closes its refinancing. Both will show whether special servicing or a sponsor-led deal wins out for large office loans.
Trepp’s takeaway is that payoff outcomes track debt yield and property type, so each month’s maturity mix will keep moving the headline number.
