On an absolute scale, commercial real estate delinquencies are well below Great Recession levels, though they are trending upwards in the first quarter of this year, according to a Mortgage Bankers Association report. New York Community Bank purchased many of the bank's assets, but some $60 billion in largely commercial real estate assets are now set to be auctioned off by Newmark.
Major real estate lender Signature Bank failed earlier this year. Even more worrisome, a massive $450 billion in commercial-real-estate loans is set to mature this year, most of which is held by banks. Regional banks - already under scrutiny after Silicon Valley Bank's historic collapse - hold 68% of all commercial-real-estate loans, many tied to struggling sectors, like office buildings, according to Bank of America. It's not just large institutions that are at risk. Big names like Blackstone, Brookfield, and Starwood all have defaulted on properties and real estate securities in recent months. Some major office landlords have already shown that they'd rather give the keys back to their lenders than throw more good money after bad. Office property owners are most at risk thanks to the remote-work phenomenon, which has been emptying out offices for three years now. The rising property losses are the result of rising interest rates, which have dramatically increased the cost of borrowing for highly leveraged commercial real estate investors. It's not just loans that are causing angst: Goldman Sachs reported $305 million of equity losses in the second quarter of 2023 tied markdowns of private portfolio investments in office-related commercial real estate. Wells increased its allowance for loan losses by $949 million, largely due to office loans, while Chase reported that it built up an additional $389 million in reserves to prepare for potential office loan losses. On Friday, July 14, JPMorgan Chase and Wells Fargo told analysts that they had set aside hundreds of millions of dollars in anticipation of rising office property loan losses. With the help of Trepp, we've compiled a list of the top bank lenders for commercial real estate.Ī looming wave of office property defaults has America's biggest banks setting aside cash to weather the storm.The largest banks are putting aside hundreds of millions in preparation for big losses.Rising interest rates and remote work have put commercial real estate in the hot seat.Account icon An icon in the shape of a person's head and shoulders.
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