CMBS refinance task $7 billion over two years

Commercial mortgage backed securities issuers face a $7 billion refinancing task over the next two years and have few sources of funds open to them.

Fitch Ratings director of structure finance David Carroll said the value of the stock of outstanding CMBS was $7.1 billion, made up of 17 trusts.

Speaking at Fitch's annual structured finance conference in Sydney earlier this month, Carroll said there was little likelihood that issuers would be able to arrange new CMBS issues. The last CMBS deal was done in August 2007.

Carroll said: "To date the refinancing task has been handled well but there is still risk. The regional banks are out of this market and the foreign banks are not going to be a source of capacity to take out maturing CMBS.

"The big banks say they are full on exposure to property but they will support issuers that have a relationship with them."

Australand and ING Retail both have CMBS issues with scheduled maturity dates later this month, worth $413 million and $244 million respectively.

Macquarie Office has a $570 million issue maturing in September and Centro Capital, Centro Shopping Centre and Macquarie Countrywide have a total of $1 billion of issuance maturing in December.

Carroll said: "Australand has raised equity and has a new bank facility. We don't see a problem there.

"Macquarie Office has raised equity and sold assets, Macquarie Countrywide has been selling assets. We don't think there will be any problems for either of the Macquarie REITs or ING Retail.

"There is a big question mark over Centro and we don't know the answer."

Carroll said asset sales involved big falls in values. GPT sold the Floreat Forum shopping centre in Perth in May for $100 million.

"In December 2007 the property was valued at $135 million. The change in value from the peak to the sale was a fall of 26 per cent.

"We think we are going to see falls of that magnitude across all the commercial, retail and industrial sectors and we think we are only half way there."