US commercial property owners with $1.5tn debt seek lenders
April 11, 2023 | Bloomberg
Almost $1.5 trillion of US commercial real estate debt comes due for repayment before the end of 2025. The big question facing those borrowers is, who is going to lend to them?
“Refinancing risks are front and centre” for owners of properties, from office buildings to stores and warehouses, Morgan Stanley analysts, including James Egan, wrote in a note last week.
“The maturity wall here is front-loaded. So are the associated risks.”
The investment bank estimates office and retail property valuations could fall as much as 40 per cent from peak to trough, increasing the risk of defaults.
Adding to the problem, small and regional banks — the biggest source of credit to the industry last year — have been hit by depositors pulling out after the demise of Silicon Valley Bank, raising concerns that this will crimp their ability to provide finance.
The debt is set to get worse before it gets better.
