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The pay-off rate on commercial mortgage-backed securities loans making scheduled balloon payments hit 61.6% in February, the second highest performance rate since December of 2008, Trepp analytics said Monday.

The CMBS analytics firm noted the pay-off rate remained well below 50% for most months since the start of the recession and even in the tepid recovery period. The only comparable month was in September when the payoff level reached 64.4%.

This marks only the fourth time in four years that the rate has cracked the 50% point, according to Trepp. 

Balloon payments are a key component of the commercial mortgage-backed securities market. CMBS mortgages generally have a balloon payment that comes due after a certain period of time. The general expectation is that a large portion of that debt will be refinanced before a scheduled payment hits.

February's high pay-off rate is tied to the refinancing of just one loan — a $500 million loan on 9 West 57th St., a Manhattan high-rise office building known as the Solow building. Its tenants include private equity firms Kohlberg Kravis Roberts & Co. (KKR) and  Apollo Investment Corp. (AINV) That single loan represented 27% of the loans coming due, Trepp said.

Looking at the payoff rate by loan count, 64.9% of February CMBS loans paid off, up 13 points from January when that number hit 51.2%.

Before the 2008 credit crunch, payoff percentages on CMBS loans generally remained well above 70%. 


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