Chicago is the top market when it comes to CMBS distress (followed by Phoenix and Las Vegas). According to Dallas-based 1st Service Solutions, of the 194 CMBS-financed properties, 53 have a loan-to-value greater than 100% and 112 have LTVs greater than 80%.
Trepp research analyst Sean Barrie (pictured) says over $200B in CMBS loans were underwritten in 2007, often with the companies being granted the loans putting down little to no equity. Because these loans were aggressively underwritten at the time, borrowers won’t be able to pay off the loans at maturity without some assistance, and CMBS servicers aren’t being flexible when it comes to repayment. Compounding matters, CMBS loans are owned by bondholders, some of which include public pension funds. As appraisals dip on these properties, the LTV will continue to rise. Here are the five biggest Chicago-area properties with an LTV of over 100% maturing in 2015.