As of March 2024, the banks with the largest commercial real estate (CRE) loans in the United States are: JPMorgan Chase: $173 billion Wells Fargo: $139.65 billion Bank of America: $82.8 billion U.S. Bank: $55.66 billion PNC Bank: $48.89 billion Citigroup: $37 billion According to Trepp, $533.2 billion in commercial mortgage loans are expected to mature in 2025. This is similar to the amount that matured in 2023, when $541 billion in CRE debt came due. However, the CRE market is facing a wave of loan maturities, with nearly $1.2 trillion of mortgage loans maturing between 2024 and 2025. This will put property owners and lenders in a difficult position, making it harder for owners to pay their mortgages or negotiate loans at current rates. Some have called this an existential crisis, as many cities are experiencing high vacancy rates. Moody's reports that many of these loans have large balloon payments that will likely need to be refinanced. However, borrowers may have to refinance at higher interest rates, which could cause cash flow issues. Fitch Ratings predicts that office delinquencies will increase from 3.3% in 2023 to 9.9% in 2025. They also expect the greatest decline in property net cash flows from office and non-trophy malls. The office sector is expected to face the most challenging conditions in 2025, as the fundamental backdrop is weakest. However, other sectors, such as retail, hotel, multifamily, and industrial, are also expected to face deterioration.
The Era of Fiscal Excess Lockdowns were the beginning of the end of office space as we’ve known it for over four decades. Work from home spurred vacancies expected to rise through 2025. The 2022 Fed interest rate hikes alone moved trillions of dollars of commercial real estate (CRE) underwater, potentially leaving taxpayers on the hook again for trillions of dollars in losses. 17 percent of U.S. office space is unleased—the highest level since 1979. This reflects years of overbuilding and shifting work habits accelerated by lockdowns. 1981 The U.S. office glut began with a change in tax code and subsidies, according to analysts. Investors were allowed to escalate the depreciation of commercial real estate lowering their tax bills 22 million employed adults (aged 18 and over) in the U.S. work from home 100 percent of the time (14 percent of all employed adults) 22% of the American workforce will work full or part time remotely by 2025 Start-up boom, easy money and tenant rebate schemes maintained the mirage of a strong market for years 6.5% the jump in CRE delinquency rates—up 30 percent in a matter of months. Rates of distress in office loans just hit 11 percent. Dozens of regional banks could fail. Using Signature and SVB as precedents, taxpayers could pick up 80 percent of the losses—while larger banks pick up the assets at pennies on the dollar FDIC holds a half cent of every dollar it insures The FDIC guarantees over $20 trillion in bank deposits with a little more than $100 billion in reserves One third of all U.S. banks are at risk of failure (a third equals 1,619 banks in total) according to a Stanford-Columbia analysis 385 U.S. banks expected to fail over commercial real estate loans alone according to National Bureau of Economic Research, overwhelming small regional banks that typically hold a third of their assets in CRE loans. $72.7 billion the refinancing shortfall that office landlords will face between now and the end of 2025 according to CBRE. Most tenants are still paying rent and lenders are being lenient, for now. Source: The meltdown of commercial real estate, Peter St Onge; Mortgage Bankers Association; Board of Governors of the Federal Reserve System; MSCI, percentages are rounded; Pew Research Center; Upwork; America’s office fire sale has barely begun, Carol Ryan, wsj.com
%% Community banks look fine , local+ good customer service; BAC has had such bad customer service=payday someday LOL
They'll just dust off their CDO playbook form 2008-9. Bring back Maiden Lane and stuff the junk in there and employ extent & pretend. After all this administration believes in fairy tales like MMT.