How Accessing the Private Investor Market for Selling Commercial Real Estate Loans


• Bank and credit union commercial real estate portfolios will be under significant pressure for the foreseeable future;
• Bank and credit union liquidity continues to alarm regulators, stakeholders and depositors, particularly as we transition towards a faster payments system;
• In light of distressed earning assets, reduced deposits and the demand for 24/7/365 instant payment systems, more financial institutions will fail if strategic liquidity planning is not implemented;
• The strategic sale of performing commercial real estate loans at favorable pricing to third-party (non-bank, and non-credit union) investors can be a win-win solution for both credit and liquidity risk.

The Commercial Real Estate Foundation is Cracking.

In the aftermath of the liquidity crisis in 2023, during which several regional banks failed due to mismanagement of their liquidity positions, financial institutions have been under heightened regulatory scrutiny. The crisis underscored the importance of robust liquidity management, credit monitoring and operational efficiency.

The convergence of high lending rates, decreasing commercial real estate values, $2 trillion in near-term commercial loan maturities, declining deposit balances, increasing cost of funds, and the lurking risk of potential economic recession, has created a perfect storm of credit and liquidity risk.

It has been chronicled that commercial real estate loan portfolios are under increasing pressure. The impending troubled commercial real estate market is facing a record volume of maturing loans, significantly increasing prospects for a surge in defaults as property owners are forced to refinance at higher rates.

According to national accounting firm Moss Adams, LLP, “The risk of default of near-term maturities has risen in recent months creating a debt dilemma in the commercial real estate industry that presents real estate investors with tough decisions. $650 billion in commercial loan maturities are expected in 2024 and in 2025 an additional $570 billion in loans are scheduled to reach maturity, followed by $460 billion in 2026. In total, approximately $2 trillion of commercial real estate mortgages are scheduled to reach maturity from 2024 through the end of 2026. The largest share is multifamily, accounting for approximately 33% of maturing loan volume. While many of these loans are performing, maturing loans will require refinancing, or, possibly asset disposition, as borrowers face the largest disruption in borrowing activity since the 2007-2009 recession. Compounding the issue, the rise in borrowing costs, primarily from higher interest rates and more restrictive covenants, comes at a time when asset values are falling.

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