Wall Street banks are quietly dumping commercial real estate loans amid financial concerns.

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Some Wall Street banks are quietly offloading their portfolios of commercial real estate loans, hoping to cut their losses. These actions stem from concerns that landlords of vacant and struggling office buildings may not be able to pay off their mortgages. The broader distress in the commercial real estate market is driven by high interest rates, making loan refinancing challenging, and low occupancy rates for office buildings due to the pandemic. For instance, late last year, an affiliate of Deutsche Bank and another German lender sold the delinquent mortgage on a 115-year-old office complex in midtown Manhattan to the family office of billionaire investor George Soros. Similarly, Goldman Sachs sold loans it held on troubled office buildings in New York, San Francisco, and Boston. While these troubled commercial loans represent only a fraction of the approximately $2.5 trillion in commercial real estate loans held by all US banks, they signal a shift away from the industry’s previous “extend and pretend” strategy. Banks are now acting in their self-interest, recognizing that some property owners, especially office building owners, may default on mortgages, leading to inevitable losses for lenders.

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Fearing Losses, Banks Are Quietly Dumping Real Estate Loans
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