via bullsnbears:
ABOUT $1.2 trillion of debt on US commercial real estate is “potentially troubled” because it’s highly leveraged and property values are falling, according to Newmark Group.
Offices are the biggest near-term problem, accounting for more than half of the US$626 billion of at-risk debt that’s set to mature by the end of 2025, the brokerage estimates. Office values have tumbled 31 per cent from a peak in March 2022, when the Federal Reserve started raising interest rates, according to property analytics firm Green Street.
Concerns are mounting that defaults will increase as property values fall and costs rise for landlords who need to refinance at higher interest rates. Over-leveraged owners are often more motivated to stop payments than sink money into buildings with diminished prospects for returns. Blackstone, Brookfield and Goldman Sachs Group are among investors that have defaulted or relinquished offices to lenders this year.