The change of consumer shopping behavior, shifting from traditional brick and mortar retail to online marketplaces, crushed many investors who funded the expanse of malls and shopping centers, largely via CMBS loans.
But this year, investors have more than consumer behavior to be concerned with. Nearly $134 billion of commercial real estate loans—more than one-quarter of which went to finance malls a decade ago—are due to refinance between now and the end of 2017, according to Morgan Stanley.
Wells Fargo estimates that about $38 billion of these loans were taken out by retailers, bundled into commercial mortgage-backed securities (CMBS) and sold to institutional investors. Cumulative losses from mostly 10-year CMBS loans issued in 2005 through 2007 already reach $32.6 billion, a big jump from the average $1.23 billion incurred annually in the prior decade, according to Wells Fargo.
While the CMBS industry is bracing for losses as many loan servicers struggle to extract any value from problematic malls, particularly those based in less affluent areas, CommLoan’s team is working diligently to become the solution for those impacted.
“We’re connecting our clients with lenders who might have a particular interest in the area, even if it’s not a prime location,” said Mitch Ginsberg, CEO of CommLoan.
The retail segment continues to struggle but CommLoan’s ability to provide borrowers with unprecedented access to capital, provides more than a glimpse of hope. With more than 350 lenders on the back end, CommLoan’s platform can quickly sort through the options available.
“Our goal is to match borrowers with the perfect product, but we’re also working hard to educate borrowers facing CMBS notes due this year, on their options. A lot of those impacted will be in the retail space.” added Ginsberg.
CommLoan is the first of its kind digital marketplace for online commercial real estate lending.