Commercial Real Estate Could Add To US Regional Banking Troubles

Corporate building facade in windows of glass and steel

zoranm

This article was first posted in Outperforming the Market on April 25, 2023.

Having been exposed to both private and public real estate, I think that there is a general view that the commercial real estate sector could be hit

Commercial real estate borrowing well below prior peaks

Commercial real estate borrowing well below prior peaks (Federal

CMBS weighted average loan-to-value by vintage year

CMBS weighted average loan-to-value by vintage year ( JPMAM)

CMBS loan-to-value ratios by vintage year

CMBS loan-to-value ratios by vintage year (JPMAM)

Share of loans held by small domestic banks, by select sectors

Share of loans held by small domestic banks, by select sectors (Axios)

Over $2 trillion in loans set to mature over the next five years, which will likely require near-term financing

Over $2 trillion in loans set to mature over the next five years, which will likely require near-term financing (PIMCO)

Leverage and pricing levels have moved significantly within the past 12 months

Leverage and pricing levels have moved significantly within the past 12 months (PIMCO)

US office vacancy rates

US office vacancy rates ( Cushman & Wakefield)

Office stress measures by market

Office stress measures by market (Kastle Systems, CoStar, First American, JPMAM)

NYC transit use vs office utilization

NYC transit use vs office utilization (Kastle, MTA, JPMAM)

Rent growth by property type

Rent growth by property type (Costar)

Absorption since COVID has only been positive in properties developed since 2015

Absorption since COVID has only been positive in properties developed since 2015 (JPMAM, Trepp)

Property value as a function of cap rate, NOI and LTV

Property value as a function of cap rate, NOI and LTV (JPMAM)

Bank's commercial real estate exposure

Bank’s commercial real estate exposure ( Bloomberg, GS, JPMAM)

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