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Refinancing Challenges

All articles tagged with #refinancing challenges

finance-and-business2 years ago•4 min saved

"2024 Commercial Real Estate Crisis: Soaring Defaults and Economic Risks"

A National Bureau of Economic Research paper and USC Finance Professor Erica Jiang warn of potential Great Depression-era levels of loan defaults in the commercial real estate sector if high interest rates persist. With 15% of commercial loans currently underwater and 45% of office loans facing distress due to declining property values and cash flows, the outlook for defaults is grim. The difficulty in refinancing these loans, especially with a significant number of them maturing in the near future, could lead to a spike in maturity defaults, posing a significant risk to the financial stability of the commercial real estate market.

via Yahoo Finance|

#commercial-real-estate #economic-research #finance-and-business

real-estate2 years ago•4 min saved

The Perils of Debt Funds for Landlords

Debt funds, a form of unregulated lending, have become increasingly prominent in commercial real estate in recent years, offering short-term loans with higher interest rates than traditional banks. These loans provide quick access to cash for property stabilization, tenant improvements, and new construction, but they come with potential risks and less favorable terms. Debt funds have stepped in as traditional banks slow or halt commercial real estate lending, and they have become a source of concern for regulators due to their lack of oversight. As the interest rate environment changes, borrowers who took out debt fund loans in the past few years may face challenges with refinancing and resizing their loans, leading to potential foreclosures and the need for additional equity.

via Crain's Detroit Business|

#commercial-real-estate #debt-funds #real-estate