The troubled commercial real estate market is bracing for a record amount of maturing loans, boosting the prospect of a surge in defaults as property owners are forced to refinance at higher rates, the Wall Street Journal reported. In 2023, $541 billion in debt backed by office buildings, hotels, apartments and other types of commercial real estate came due, the highest amount ever for a single year, according to the data firm Trepp. Commercial-debt maturities are expected to continue rising, with more than $2.2 trillion coming due between now and the end of 2027, Trepp said. Most of these loans have so far been repaid or extended. In 2022 and 2023, many owners were able to exercise one- or two-year extensions built into their original loans. Now, those extensions are burning off. That is compelling many borrowers to confront the higher rate environment — along with higher vacancies and weakening cash flows — which is depressing property values. Some owners and creditors are also grappling with the expirations of deals they made early on during the pandemic to delay payments until the worst of the health crisis passed.
