Nine loans were modified through extensive liability management. Six, amounting to EUR 723m, have been pushed to 2027 and three (EUR 118m) to 2026. Meanwhile, three extended loans (EUR 405m) were pushed to next year.

“These outcomes are consistent with our expectations expressed earlier in the year that most loans due to refinance this year would fail to do so,” said Benjamin Bouchet, director in Scope’s structured finance team.

Bouchet added that the fully extended maturity profile of securitised European loans appears more manageable than at the end of 2023. Excluding the industrial sector, between EUR 1.65bn and EUR 2.25bn of loans are due in each of the next three years. In terms of new issuance, three CMBS have priced year-to-date to September and another transaction secured by industrial assets is being marketed. This will push issuance above 2023.

“The expectation of further gradual rates reductions in the euro area and the UK, coupled with a soft landing of the economy and a tight labour market, is positive for transaction performance, and further issuance,” Bouchet said.

“But two thirds of securitised loans in European CMBS continue to fail bank lenders’ refinancing requirements. While that’s down from 75% last year, the five loans securitised this year exhibit higher leverage at closing than in 2023 as well as lower debt yields,” Bouchet added. “Whether we are at the trough or not, we certainly expect more pain and equity injections from borrowers to refinance.”

Four loans are of particular concern: The Squaire, secured against the iconic office and hotel property next to Frankfurt airport; the senior loan of Taurus 2017-1 IT, which is seriously over-leveraged; Salus, secured against the CityPoint office tower in London and recently put up for sale by its sponsor Brookfield; and the senior loan of Taurus 2020-1 NL secured predominantly against office properties in the Netherlands.

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