Your commercial real estate loan matures this year. Now what?

Investors are at a crucial point as trillions of dollars of commercial real estate loans are coming due worldwide, creating both challenges and opportunities for real estate owners.

While higher interest rates have changed market conditions, private investors still have multiple options available—from traditional financing to innovative restructuring approaches.

More than $3 trillion of real estate assets globally have debt that will mature by the end of 2025, according to JLL’s Global Capital Outlook. Based on average loan-to-value (LTV) ratios across global CRE markets, these loans total an estimated $2.1 trillion with more than 75% based in the U.S. The multi-housing/living sector is expected to account for 25% of upcoming loan maturities globally, followed by office assets at 23%.

For investors in North America, the U.K., Germany, and other large markets, various debt and equity structures offer different upsides. But as private investors brace for more volatility in the short term—driven by geopolitical and geoeconomic factors—it’s essential to analyse all related factors from current asset values and loan costs to sponsor leverage and interest coverage ratios (ICR).

Here are some of the strategic options for private investors looking to make smart decisions as their loans come due.

Global capital sources including banks, debt funds, insurance companies and CMBS conduits offer private investors a range of options depending on their business needs. Alternative debt structures allow investors to pool multiple capital sources through a single loan with greater flexibility.

“A lot of property owners in the London market are anticipating net operating income (NOI) growth,” said Luca Giangolini, senior director of debt and structured finance, JLL international capital markets. “When it’s time to refinance, we model it and look at what the constraints are: Is it LTV? Is it interest coverage? From there we create the right solution—usually a whole loan solution.”

Refinancing in today’s economic climate requires a keen understanding of market conditions at both a local and broad level. While the first quarter of 2025 saw multi-housing/living and industrial sectors (including data centre) securing the best rates, followed by retail and office, terms still vary significantly based on location, vintage and business profile.

Given these market dynamics, private investors can secure favourable terms by exploring their refinancing options well before maturity. Most importantly, since loans typically take six months to close, beginning discussions at least nine months before maturity is crucial.

In cases of low-yielding assets where ICR ratios are the biggest refinancing constraint, sponsors can use interest-rate derivatives trades as a buffer against market headwinds. This involves the use of financial instruments that include interest rate swaps, swaptions, caps, and collars which help mitigate future rate risk and can improve interest cover.

After an extended period of historically low interest rates, investors in both Europe and North America have been acclimating to a “new normal” with uncertainty around how long rates will remain elevated. That combined with adjusted asset values and wider bid-ask spreads has put pressures on maturing loans in recent years.

Projections for this year look more favourable. In the U.S., liquidity and transaction activity are on the rise. Market conditions are stabilising as vacancy rates decline in gateway and growth cities. But challenges persist for owners of class B and C office and retail properties. That means private investors will need to work through any asset management issues to secure the best terms on refinancing in 2025.

“It’s important to determine a business plan for each asset from here into the medium and long term and structure your financing accordingly,” said Michael Cosby, senior managing director, JLL capital markets.

Recapitalising through one or more equity sources is another avenue for private investors. Preferred equity and mezzanine financing are two options for those looking outside of the traditional debt markets.

For those who plan to wait out the current market uncertainty, equity partnerships provide necessary capital while helping share the risk.

In 2023’s tight capital markets environment, JLL helped a boutique real estate investment firm secure a strategic joint venture (JV) partnership to revitalise a 176-unit Texas apartment complex. The joint venture provided $1.5 million for property improvements, enhancing both facilities and curb appeal.

JVs may be relevant for situations where significant capital injections are needed to execute new business plans, such as redeveloping assets. But JV partnerships can be a tricky fit for some private investors due to long-term commitments, uneven contributions, and potential conflicts of interests. In cases where private investors are looking to take a step back from daily operations, working with a family office is another means of managing financing pain points without giving up property ownership.

Across all markets, private investors can invest directly or through family offices, and partner with well-connected debt experts to source capital from banks, insurance companies, and debt funds. Investors can additionally bolster their capital stacks by tapping into new equity sources with family offices as their fund managers. This gives property owners greater flexibility and more time to decide whether they want to do a complete loan refinance or extend their existing debt, such as with an equity funded paydown. Some investors may want to look at other options.

“There is a lot of liquidity for residential, logistic and hotel assets in the German markets,” said Dominik Rüger, senior director of debt and structured finance, JLL. “Private investors can use various debt combinations to reach their ideal leverage ratios.”

Knowing when to sell can be one of the toughest decisions for many investors and information is key. Intel such as detailed formulas based on current valuations and regional market dynamics with future projections using tailored proprietary data.

In the U.S., JLL's proprietary AI platform, Horizon, tracks over 300,000 multifamily properties, including detailed debt maturity data. This technology, combined with real-time market insights from over 1,000 monthly lending quotes, gives investors an informed picture of both current conditions and emerging trends.

Partial sales and other disposition strategies offer options to private investors looking to recapitalise without taking on additional leverage. Investors with multi-asset portfolios can sell underperforming properties while keeping their crown jewels. For owners looking to sell stakes in a single asset, or perhaps sale-leasebacks can allow them to maintain their operations while simplifying financial obligations.

Those looking to diversify their portfolios and raise equity for other investments can also explore different selling strategies to best suit their business needs.

With over $3 trillion in commercial real estate assets having debt coming due in 2025, many investors are weighing their next move. While global markets stand ready with capital for quality assets, the landscape has changed. Success comes down to timing and strategy—whether that’s traditional refinancing, bringing in investment partners or exploring new approaches. The earlier you start planning, the more options you'll have. JLL’s global reach and deep market intelligence help private investors evaluate all options.

Ready to discuss financing options? Connect with a specialist here.