Jul
23

Loan-to-Value Ratios Spike Following Wave of Reappraisals, Says Trepp

By
– National Real Estate Investor

Special servicers face a daunting task in trying to resolve billions of dollars in troubled commercial real estate loans based on new research from Trepp LLC. Of the 1,125 CMBS loans on properties that were reappraised during the first half of this year, 986 recorded loan-to-value ratios of greater than 100% largely due to falling valuations.

It’s a cause for concern because the unpaid principal balance exceeded the new property appraisals by a wide margin in many cases. The average loan-to-value ratio among the 1,125 CMBS loans in the survey sample was a whopping 160%, up from 72.7% when the loans were securitized. (The 1,125 loans total $15.4 billion in volume.)

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