A $10B Challenge: 2024 Loan Maturities in Texas and Oklahoma

February 27, 2024

According to Yardi Matrix data, there are 552 property loans across Texas and Oklahoma set to mature in 2024. The loans carry an average interest rate of 4.38% with 5.3 year durations and are secured by over 125,000 apartment units.

Nearly 50% of the loans are on 200-499 unit properties. An additional 15% is secured by mid-scale buildings with 100-199 apartments. Large 500+ unit properties make up a small portion at just 8% of the total.

The majority of the 552 loans maturing in 2024 are permanent mortgages, accounting for 320 loans worth $6.10 billion (60.7% of total amount). Construction loans also represent major exposure at 72 loans totaling $1.72 billion (17.1%). CMBS conduits are the next largest category with 101 loans at $1.85 billion (18.4%), followed distantly by bridge loans at 31 loans worth $261 million (2.6%). Other property loan types like acquisition and development, bonds, and lines of credit make up only a small portion of the total.

For the loans with known interest terms, most carry fixed rate financing, accounting for 130 loans worth nearly $2 billion (19.8% share). Variable rate loans are the next largest category at 37 loans totaling $907 million (9.0% share). Average interest rates are 5.84% for variable rate loans and 4.33% for fixed rate.

While balance sheet financing from banks and insurance companies makes up over a third of the total $10 billion, the mix of CMBS, debt funds and GSEs represents 50% of the total dollar amount. Almost $1 billion is tied to variable rate loans indexed to short-term benchmarks like Prime or LIBOR.

Additionally, the higher risk bridge loans and construction debt make up almost 20% of the total, signaling vulnerability to asset value declines. Together, the volatile funding sources and transitional loan categories mean the lender won’t have full control over refinancing outcomes when deals mature in 2024.

Another area of concern is the $3.8 billion tied to 2.5 to 4 year terms from debt funds. Beyond 2024 these positions will need to be refinanced, likely at much higher rates depending on Fed actions. This presents large refinancing risk from both availability and cost perspectives.

In summary, while permanent mortgage lending represents the majority of the exposure, the loans still face material uncertainty that could negatively impact performance. Keeping a close eye on broader rate trends and debtor health in these markets will be critical over the next 18 months. Non-bank loan providers with higher return targets also introduce portfolio volatility that bears ongoing monitoring and management.

Author: Nicholas Brown