Texas Real Estate Business

MAY 2017

Texas Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in Texas.

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www.REBusinessOnline.com Texas Real Estate Business • May 2017 • 43 ing average loss rate for retail loans has been trending downwards since mid-2016 to the 46 to 48 percent range in recent months. The loss severity is a percentage calculated by measuring the amount of realized losses associ- ated with a loan against the unpaid principal balance at disposition. (As an example, the loss severity for a $100 million loan that was closed out with a $10 million loss is 10 percent). Dur- ing this time frame, 9.59 percent of all retail loans were written off with some kind of loss at an average loss severity of 48.06 percent. By comparison, 13.13 percent of office loans have taken a loss, generating an average loss rate of 43.20 percent. The current status of maturing loans can serve as an indicator for losses and the refinancing outlook. Based on a February snapshot, around $102.2 bil- lion in fixed-income mortgages are still up for refinancing this year, with retail loans making up around 29.81 percent of this number. The maturing volume falls to $86.4 billion combined between 2018 and 2021, but retail loans will comprise large portions of each yearly maturing total after next year. Looking at retail loans that will come due for the remainder of the year, 26.57 percent is in special servicing while 25.08 percent is 30 days or more delinquent on pay- ment. 10.37 percent of the maturing balance through December has been assigned $3.2 billion in total ARAs, a good chunk of which will show up as losses taken by the borrower. The av- erage occupancy level for this batch of properties is currently pegged at 93.4 percent. Rising NOIs, persistent low interest rates, and solid commercial real estate fundamentals will enable many of these loans to pay off in the next few months while others obtain additional financing. Since risk retention rules that place higher capital charges on issuers were implemented in late December, CMBS issuance has dropped off consider- ably from previous years. Issuance reached $11 billion in the first quarter of 2017, which is a 34 percent decrease from the same period in 2016. In par- ticular, growing angst surrounding widespread retail downsizing has caused some pullback as the share of retail loans in the issuance pipeline dwindled to 15.27 percent in the first three months of this year, down from 26.12 percent and 24.93 percent of to- tal volume for 2015 and 2016, respec- tively. Looking at the favorable pricing garnered by risk retention deals issued thus far, issuance may pick up as regu- latory uneasiness recedes in the com- ing months. Preferred Member Partners A&R; SEALCOATING Detroit Metro and Lansing MI www.aandrsealcoating.com ACE ASPHALT Tucson, Phoenix, NM, Las Vegas, Denver www.aceasphalt.com ACE ASPHALT/BROWN BROTHERS ASPH. & CONCRETE Colorado www.brownbrosasphaltconcrete.com ALEXANDER SEALING AND STRIPING AL, Panhandle FL, NOLA, MS www.alexanderpaving.com ALL COUNTY PAVEMENT MAINTENANCE INC. Long Island NY www.allcountypavementmaintenance.com AMERICOAT Columbus, Cincinnati, Dayton, N WV www.americoat.com ASPHALT SOLUTIONS Ohio, Western PA www.asphaltanswers.com ATLANTIC SOUTHERN Self Perfom FL and USA GC www.atlanticsouthernpaving.com BETTER SURFACES, LLC TN, KY, AR C&K; ASPHALT SE USA + IL, VA,WV, OH www.ckpaving.net CALVERTS' PAVING Kansas City MO www.calvertspaving.com CAROLINA PAVEMENT TECHNOLOGY NC/SC/GA/TN/MS www.carolinapavement.com D&G; SEALCOATING AND STRIPING SW FL www.dngsealcoat.com DELAWARE VALLEY PAVING Philadelphia and S NJ www.delawarevalleypaving.com EA OUTDOOR SERVICES Indianapolis all of Indiana and OH www.eaoutdoorservices.com HADDOCK ENTERPRISES SC/NC/GA and S VA www.haddockenterprises.com IMPERIAL PAVING Los Angeles CA and S California www.imperialpaving.biz LIBS PAVING Louisville and Lexington KY www.libspaving.com MURPHY PAVING & SEALCOATING Chicago IL www.murphysealcoating.com NORTHEASTERN STRIPING CORP Binghamton NY S NY www.northeasternstriping.com PAVEMENT EXCHANGE GROUP USA www.pavementexchange.com PAVEMENT SERVICES DFW/ Houston www.nopothole.com PINNACLE PAVING AND SEALING Cincinnati, N KY and Eastern IN www.pinnaclepaving.com POBLOCKI PAVING Milwaukee, Madison and Green Bay WI www.poblockipaving.com RAM PAVEMENT NC/SC/GA www.rampavement.com TIBBS (A&R; TECH) Baltimore and DC www.tibbspaving.com TRI-STATE ASPHALT Central and N NJ www.tristateasphalt.com TURNER ASPHALT VA/NC/SC/TN www.turnerasphalt.com Associate Members AARDVARK ENGINEERS NC, SC, VA, FL, GA, PA,TN, KY, MD www.aardvarkengineers.com OVERBY PAINTING Eastern USA Striping ROOF CONNECT Nationwide Roofing www.roofconnect.com

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