A wave of five-year commercial loans originated in 2020 and 2021, when borrowing was cheap and cap rates were tight, is now coming due into a very different market. Nationally, $76.6 billion in CMBS loans hit “hard maturity” in 2026 — meaning no extension options remain — with nearly 40% of that volume concentrated in the fourth quarter, according to Trepp, Inc. (a CMBS and commercial real estate data firm). Roughly a third of those loans carry debt yields at or below 8%, the level where refinancing friction is most likely. The Federal Reserve has held its benchmark rate at 3.50% to 3.75% through the first half of the year, and the 10-year Treasury has hovered near 4.0% to 4.25%. For owners who locked in financing five years ago, the math at refinancing no longer looks the way it did at origination.
South Florida is not immune, even though our fundamentals remain among the strongest in the country. We have already seen this maturity pressure show up in real transactions this year. In Edgewater, a flex-office operator sold its building for $2 million less than it paid in 2019. In Boynton Beach, an owner surrendered an apartment complex to its lender in lieu of foreclosure, at a value equal to the original 2021 loan balance. In another deal, a buyer picked up a Princeton apartment complex at a 24% discount to its 2021 sale price. These are not signs of a market in crisis, industrial, retail and well-located multifamily in our region continue to outperform national averages, but they are proof that the refinancing wall is real, it is local, and it is already producing outcomes for owners who wait too long to act.
Why the Gap Is Opening Now
The core issue is simple: a loan underwritten in 2020 or 2021 at a 3% to 4% rate, against a cap rate that has since moved out, often will not refinance at par today. Current cap rates vary sharply by asset class in our market, roughly 5% for well-located multifamily, near 6% for industrial and retail, sub-5.5% for trophy office in Brickell and downtown West Palm, but 8% or higher for suburban office. An owner whose asset sits in a compressed cap-rate niche may refinance cleanly. An owner in a wider band may face a real shortfall between what a new lender will fund and what is owed, and needs a plan for that gap well before the maturity date arrives, not after.
What Owners Should Be Doing Now
First, start the conversation early. Lenders, borrowers and their counsel all have far more room to negotiate nine months before a maturity date than nine days before one. Waiting for a default notice cedes leverage that a proactive borrower would otherwise keep.
Second, run the numbers honestly. Model expected refinance proceeds against the current payoff balance using today's cap rates and debt terms for the asset's specific class and submarket, not the terms available in 2021. Knowing the size of the gap, if there is one, determines every option that follows.
Third, know the bridge options before you need them. Seller carryback financing, mezzanine debt, preferred equity and joint-venture capital are all closing gaps in this market where conventional bank debt alone will not. Each comes with different cost, different subordination issues, and different tax and control consequences that need to be structured correctly from the outset.
Fourth, review the loan documents now, not at default. Extension rights, cash management triggers, guaranty carve-outs and lender consent provisions were negotiated years ago under different assumptions. Understanding exactly what they require, and what room exists to renegotiate them, is the difference between a managed workout and a forced sale.
None of this requires panic. Much of the distress from the 2022 rate shock already worked its way through the market, and South Florida's population growth, tight retail and industrial vacancy, and flight-to-quality office demand give owners real leverage that borrowers in weaker markets do not have. But the 2026–2027 maturity wave is the biggest wildcard facing property owners in our region this year, and the owners who come out ahead will be the ones who treat this as a transaction to be structured now, rather than a problem to be managed later.
Daniel A. Kaskel chairs the Real Estate, Corporate & Land Use group at Sachs Sax Caplan Kaskel & Schner, PLLC in Boca Raton, where he represents owners, lenders and investors in acquisitions, dispositions, financing and workouts across South Florida.