The percentage of commercial mortgage-backed securities loans paying off on their balloon date reached the highest level in nearly four years in September, reported Trepp LLC, New York.
In September, 68.2 percent of CMBS loans reaching their balloon date paid off--up nearly 20 points from August's reading and more than 40 points from the July number.
"Last month [August], we predicted that the payoff rate could improve in the coming months," stated Trepp's September Payoff Report. "The September result easily surpassed our expectation."
September's payoff reading exceeded the 12-month average of 42.8 percent by more than 25 basis points, assuming no balance-weighting across the months, Trepp said. By loan count as opposed to by balance, just under half-49.6 percent--of loans paid off. On that basis, the 12-month rolling average reached 52.8 percent.
Trepp said the comparison of the payoff percent by balance versus by loan count represents another turn. Over the last four years, the percentage of loans paying off by count usually surpassed the payoff percent by balance, indicating that mostly smaller loans could refinance or otherwise pay off the balloon balance.
"This month [September] those numbers flipped, indicating there was a bias toward larger loans paying off. Prior to 2008, the monthly payoff percentages were typically well north of 70 percent," Trepp said. "Since the beginning of 2009, however, there have only been five months in which more than half of the balance of loans reaching their balloon date actually paid off."
Trepp noted that its analysis looked only at loans that reached their balloon date without having prepaid or defeased. If a...