Loan Modifications Surge in 2024
The big picture: Loan modifications have been jumping this year.
Key Numbers:
- 12-Month Modifications: $22 billion in loans modified by May 31, 2024.
- 2024 YTD: Over $9 billion in modifications, compared to $16.8 billion for all of 2023.
- Monthly Average: $1.8 billion in modifications, with April peaking at $3 billion.
Top Trends:
- Maturity Date Extensions: 46.2% of modifications are for extending maturity dates.
- Dominant Loan Types:
- CRE CLO Loans: $4 billion YTD, 44% of all 2024 modifications.
- SBLL Loans: $3.3 billion YTD, 36.4%.
- Conduit Loans: $1.6 billion YTD, 17.4%.
Market Dynamics:
- Increased Requests: Elevated interest rates and delinquency levels drive demand for loan modifications.
- “Pretend and Extend”: Borrowers and lenders work to extend loan terms in a challenging rate environment.
Notable Modifications:
- Phoenix Corporate Tower: A $33.7 million loan (originally $38.0M) for a 457,878 SF office in Phoenix, modified in April 2024 to extend maturity to July 2025.
- Retreat at Riverside: A $63.9 million loan for a 412-unit multifamily property in Atlanta, extended to July 2024 due to life safety issues and upcoming maturity.
Outlook:
- 2024 CRE Maturity: $210 billion in securitized maturities expected, fueling further demand for loan modifications in the latter half of the year. 2024 modifications are poised to exceed 2023 levels, especially in the CRE CLO category, while other loan types track closely with last year’s benchmarks.
