Loan Modifications Were the Common Theme in 2023
With higher rates and a challenging lending environment, more and more borrowers are seeking to modify their loans. CRED iQ analyzed all modifications that occurred in 2023 within the securitized universe, including all CMBS, CRE CLO, SASB, Fannie Mae, Freddie Mac, and Ginnie Mae.
In total, $13.6 billion across 441 loans were modified in 2023. The highest volume of modifications occurred in the second quarter of the year. Single-borrower large loan (SBLL) deals represented almost half of this year’s modifications, followed by CRE CLO deals. Office ($4.6 billion) and multifamily ($3.3 billion) loans were modified the most in 2023.
The number of modifications in 2023 almost doubled compared to 2022. Extending the loan term has been the most popular modification type in 2023 and CRED iQ predicts maturity extension modifications will continue to be a popular tool for borrowers in 2024, when $209.6 billion of CRE debt is slated to mature across the securitized sectors.
Some of the largest loan modifications in 2023 included:
• The 831,000-square-foot office building at 375 Park Avenue, which backs $782.8 million in debt and was set to mature in May 2023. The maturity date was extended by a year.
• The $536 million indebted Aon Center, a 2.8 million-square-foot office tower in Chicago, which was originally set to mature in July 2023. The loan was modified by extending its maturity by three years with no change to the interest rate.
• Two modifications occurred for the $219.6 million loan on Aven, a 563-unit multifamily building in Los Angeles The first modification took place in May to convert the loan from LIBOR to SOFR. The second modification occurred in September when a one-year maturity extension was utilized to extend the original March 2025 maturity to March 2026.
Mike Haas is the founder and CEO of CRED iQ.