The short answer
You have five options at maturity — refinance, extend, recapitalise, sell, or restructure — and which ones remain available is largely a function of how early you start. Twelve months out you have all five. Ninety days out you have whatever your lender is willing to offer, which is a much shorter list.
A very large volume of commercial real estate debt is reaching maturity across 2026 and 2027. Estimates differ because publishers count different loan universes: figures for 2026 maturities commonly land in the range of roughly $875 billion to over $900 billion, and the wave is generally expected to peak in 2027, with one widely-cited estimate putting that peak near $1.26 trillion.
The reason for the concentration is unremarkable. A large cohort of loans was originated in the 2010s and early 2020s with five- and ten-year terms, at rates and valuations that reflected that period. Those loans are now maturing into a different rate environment and, in several property types, different valuations.
The aggregate number is not the useful part. What matters is that a maturity is a decision with a shrinking option set, and the shrinkage is a function of time. This is a piece about sequencing.
Start with the honest gap calculation
Before considering options, size the problem precisely. Take today's NOI — underwritten the way a lender will underwrite it, with market vacancy, a management fee, and a replacement reserve — and run the three sizing tests at current market terms: debt service coverage at a stressed rate, debt yield, and loan-to-value against a realistic current valuation.
The lowest of those three results is roughly what new senior debt is available. Compare it to your current outstanding balance. The difference is your gap, and every option below is a different way of dealing with it.
Option one: refinance
If new senior proceeds cover the existing balance, this is straightforward and you should be in market early to get competitive execution rather than accepting the first quote.
If there is a gap, refinancing is still available — it just requires filling the gap. Sources, roughly in order of cost: additional common equity from you or your partners, preferred equity or mezzanine, an eligible-scope C-PACE assessment where the property is in an enabling jurisdiction and the work qualifies, or proceeds from a partial asset sale.
The C-PACE route is genuinely underused in this situation. Where a property needs capital improvements anyway and sits in an enabling jurisdiction, funding that scope with long-dated fixed-rate assessment capital reduces the equity or subordinate capital required at refinancing. It requires the new senior lender's consent, which is much easier to obtain as part of a new financing than as a later amendment.
Option two: extend with the incumbent
Often the cheapest and fastest answer, and frequently available if you ask early enough. Lenders generally prefer a performing extended loan to a foreclosure, and most have a process for it.
Expect them to want something: a principal paydown, a rate reset to current market, additional reserves or escrows, a partial guarantee, more frequent reporting, or a shorter extension than you asked for. Those are negotiable, and your leverage depends almost entirely on whether the asset is performing and whether you brought the conversation to them before you had to.
A note on securitised loans: if your loan is in a CMBS trust, you are dealing with a servicer operating under a servicing agreement rather than a lender exercising judgement. What they can agree to is constrained by that document, and the process for a modification frequently involves transfer to special servicing. That path takes longer and follows different rules. Find out early which situation you are in.
Option three: recapitalise
Bring in new equity at the asset or portfolio level, restructuring the ownership to retire or reduce the existing debt. This is the right answer when the asset is fundamentally sound but over-levered relative to current values, and when you would rather own less of a good asset than all of a problem.
Recapitalisation capital exists in quantity and is actively looking for exactly these situations. The trade is dilution, and usually a restructured promote. It takes longer than an extension because a new investor has to diligence the asset properly.
Option four: sell
Sometimes correct, and it is a decision rather than a failure. If the gap requires equity you do not want to commit, if the business plan has genuinely changed, or if the capital is better deployed elsewhere, selling into a maturity is a legitimate outcome.
The critical variable is timing. A property marketed twelve months before maturity is a normal sale. A property marketed sixty days before maturity is a distressed sale, and every buyer will know it. The price difference between those two situations is usually far larger than the cost of any of the other options.
Option five: restructure or hand back
Where the gap cannot be bridged on terms that make economic sense, the remaining paths are a negotiated restructuring — a modification with the lender taking some form of participation or writedown — or a consensual transfer of the asset. Both are better outcomes than a contested foreclosure, and both are far more achievable when the conversation begins early and the sponsor has been transparent throughout.
The timeline that determines your options
- Twelve to eighteen months out: run the gap calculation. All five options are open. If you will need subordinate capital or a recapitalisation, this is when you start, because those processes take months.
- Nine to twelve months out: go to market for new senior debt and, in parallel, open the extension conversation with the incumbent. Having both live is what gives you negotiating leverage on either.
- Six to nine months out: converging on a path. If a sale is the answer, this is the last comfortable window to run a normal marketing process.
- Three to six months out: execution. Options requiring new capital or new equity partners are becoming impractical. Extension and refinancing remain live.
- Under ninety days: you are taking what is offered. Extensions get worse, buyers price the deadline, and restructuring conversations start from a weaker position.
What actually goes wrong
In practice the failures are rarely analytical. They are behavioural: waiting because the numbers might improve, avoiding the lender conversation because it is uncomfortable, running the gap calculation on the sponsor's own optimistic NOI, or approaching only one capital source and discovering at month five that it will not work.
The sponsors who navigate maturities well are not the ones with the best assets. They are the ones who did the arithmetic early, honestly, and then ran two or three paths in parallel until one closed.
Frequently asked questions
How much commercial real estate debt is maturing?
Estimates for 2026 maturities commonly range from roughly $875 billion to over $900 billion, with the wave generally expected to peak in 2027 — one widely-cited estimate puts that peak near $1.26 trillion. The figures differ between publishers because they count different loan universes, so treat any single number as indicative of scale rather than precise.
When should I start dealing with a maturing loan?
Twelve to eighteen months before maturity if there is any chance of a proceeds gap. That is the window in which all five options remain available, and it is the minimum realistic runway for anything involving new subordinate capital or a recapitalisation. Inside ninety days you are largely choosing among what is offered to you.
Will my lender extend?
Frequently, if the asset is performing and you start the conversation early — most lenders prefer a performing extended loan to a foreclosure. Expect conditions: a paydown, a rate reset, additional reserves, or a shorter term than you wanted. If your loan is securitised, you are dealing with a servicer bound by a servicing agreement rather than a lender exercising discretion, which changes both the process and the timeline.
Can C-PACE help with a refinancing gap?
Often yes, and it is underused for this. Where the property is in an enabling jurisdiction and needs capital improvements with eligible scope, funding that work with long-dated fixed-rate assessment capital reduces the equity or subordinate capital needed at refinancing. It requires senior lender consent, which is considerably easier to arrange as part of a new financing than as a later amendment.
Is selling into a maturity a bad outcome?
Not inherently — it is a legitimate decision when the gap requires capital you would rather deploy elsewhere or the business plan has changed. What makes it a bad outcome is timing. A property marketed twelve months before maturity sells normally; one marketed sixty days before sells at a discount every buyer can see coming.
Sources
This article is general information about capital structures and financing mechanics. It is not investment, tax, accounting, or legal advice, and it is not an offer to sell or a solicitation to buy any security. Programme rules, statutory deadlines, and market terms change. Confirm anything you intend to rely on with advisers engaged on your specific facts.