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Globe St/Erik Sherman 08-28-2025
The commercial real estate sector is facing what Trepp has described as a “critical inflection point” as a growing share of loans reach maturity without being paid off or refinanced. While much of the lending data in the industry remains private, commercial mortgage-backed securities provide a public window into the extent of the challenge.
In a new report, Trepp examined a sample of $133 billion in fixed-rate, private-label CMBS loans scheduled to mature between January 2020 and April 2025. The analysis excluded loans that had extension options, were already delinquent or defeased 12 months before maturity, or lacked financial performance data at that point. The loans came from conduit, large loan, and single-asset single-borrower (SASB) deals.
The study found that 34% of the loans in the sample failed to pay off at or before their scheduled maturity date, while 66% resolved on time. Trepp noted that this rate is well below pre-pandemic levels, when payoff performance in many subsectors “hovered well above 80%.”
Office and retail properties accounted for much of the missed maturities. Retail represented the largest portion of maturing loan volume at $47.4 billion, or 35.6% of the total. About $16.5 billion of that, or 35%, did not pay off on time. Offices proved even more of a challenge. Of $36.7 billion in office-backed loans, 40%—about $14.7 billion—failed to meet their scheduled payoff. Mixed-use loans struggled as well, with a 46% non-payoff rate.
Other property types fared better. Lodging, though among the sectors hardest hit during the pandemic, recorded a 76% payoff rate. Trepp attributed this partly to capital markets’ willingness to recapitalize hotel-backed loans, and partly to the flexibility hotels had in raising or lowering room rates as demand shifted. Multifamily loans paid off at rates above 70%, while both industrial and self-storage achieved more than 95%. Smaller subsectors, such as mobile home parks, cooperative housing and healthcare, reported near-perfect or perfect payoff rates, though their loan volumes were relatively minor.
Trepp observed that filtering out loans already delinquent a year before maturity may have improved payoff rates in lodging and potentially other sectors. Nonetheless, broader patterns emerged. Debt service coverage ratios (DSCR) and debt yields a year ahead of maturity correlated closely with performance: properties that paid off on time generally posted stronger credit metrics than those that did not. For example, office loans had median DSCRs of 1.73 for successful payoffs compared with 1.51 for failures, while in retail, the divide was 1.65 versus 1.51.
There were anomalies as well. In the “other” property category, loans that did not pay off showed unusually high DSCRs—a median of 3.62 compared with 1.51 for loans that resolved on time.
Ultimately, Trepp noted, weaker credit fundamentals were common among non-payoffs, but what happens after maturity is just as significant as what happens before. Resolution times and outcomes varied widely by sector, underscoring the growing uncertainty facing the commercial real estate industry as the maturity wall approaches.