...Folks, the CRE Debt problem remains there, the banks have given relief in extension of time to allow their customers buy more time to avoid a default, but with interest rates staying high (and possibly even going higher) and economy sinking more, it would just be a matter of time before this blows up.
...Massive bad debts about to hit US banks that have not made sufficient provisions, hoping it would just go away, somehow magically. And in the mean time, market participants are chasing banks to greater heights following the herd.
...this even makes subprime like child's play. No one would want to buy commercial property when they can't lease it and unlike residential, there's no demand.
...IMO commercial properties have a short window before things go really pear shape. People can be Ahead of the Curve or wait to see the reckoning and unable to act when it arrives.
US CRE Debt still remains challenging.
The amount of outstanding commercial mortgages set to mature by year-end 2024 grew from $658 billion by the end of 2022 to $929 billion a year later. - GS
Lenders have been willing to extend and modify terms instead of calling an outright default.
But, interest rates are not going back to pre-pandemic levels and at some point, these loans will have to be refinanced at higher rates.
Further declines in the value of commercial properties will put additional pressure on the loan terms.
