Haven’t heard of the “Wall of Maturities” yet? If your business has invested in a commercial real estate loan, you soon will.
Within the next few years, the country’s commercial real estate debt will mature at unprecedented levels. Some 11,000 commercial mortgage-backed loans are expected to mature between now and 2017. Trepp data has recently revealed that approximately $346 billion in commercial mortgage-backed securities will mature between 2014 and 2017, hitting a peak of $113 billion in 2016 alone.
As a result, your business can’t afford not to prepare for this upcoming Wall of Maturity.
There are typically three things every business will need to do in the two years before a commercial real estate loan matures. To make sure your business’ loan matures as it ought to, follow these three tips:
Start shopping immediately
Preparation is always a must when it comes to finance and loans. If your loan will mature within the next 24 to 36 months, it’s imperative to start talks with banks, credit unions and non-bank lenders now — not later. This will help you understand the options you have available to you, as well as the current lending and financing climate.
Be ready to inject capital into the loan
Trepp researchers recently found that approximately 20% of all commercial mortgages maturing over the next three years or so will require additional capital to be injected. If your properties are likely to be refinanced or sold, it’s your business’ responsibility to add some extra capital into your mortgage.
Write to Congress
Did you know that 2015 is on par to be the strongest year of economic growth in the U.S. since the end of the Great Recession? As a result, it’s time to appeal to Congress to re-instate the 504 refinancing provision for its commercial real estate lending laws. By pushing Congress and the President to take action before the Wall of Maturities crisis hits in 2016 through 2017, thousands of small businesses just like yours will benefit immensely.
Have any other questions about where to get the best commercial real estate loans or commercial mortgage rates? Ask us anything in the comments below.