Real estate investors wary as rental market slows and hotel sales decline.

Investors who bought apartment buildings during the pandemic era based on the assumption that rents would continue to increase are facing big losses as rents stagnate and expenses rise. The problem could worsen as more mortgages expire at properties where fix-and-flip strategies have stalled, throwing a growing number into default. Some of the most speculative investment deals were done with mortgages shoveled into a riskier part of the securitized-loan market known as commercial-real-estate collateralized loan obligations, or CRE CLOs, which could lead to an uptick in delinquency rates. Falling property prices have compounded the problems for investors, and as short-term debts come due, they will be difficult to swap with commensurately sized loans today, forcing landlords to pour in millions of dollars to pay the difference.