The commercial real estate sector continues uneasily eyeing issues like the continued increase in the Effective Federal Funds rate. Also challenging is continued economic volatility, which isn’t being helped by the current banking situation.
Then there are the pending commercial real estate debt maturities. A handful of years ago, floating-rate debt was plentiful and cheap. Not so much anymore. “Given the changes in lenders’ underwriting criteria, as existing loans mature, borrowers are now facing the reality of cash-in refinance to meet their extension tests, or to qualify for a new loan,” Jon Pharris, CapRock Partners’ President and Co-founder told Connect CRE.
Other experts also told Connect CRE that there are limited options to the current scenario. The choices involve refinance, asset sales, and in the absolute, absolute worst-case scenario, defaulting on the loan.
