With Commercial Real Estate Still Challenging, Lenders Offload Troubled Loans At A Loss
Many lenders don’t want to foreclose because they don’t want to become landlords, according to a corporate real estate adviser.
While leasing activity and vacancy trends suggest the U.S. commercial real estate market is stabilizing, office values are still well below post-pandemic peaks, recent reports show.
In some cases, lenders don’t want to foreclose because they don’t want to become landlords. As an alternative, Marino said, they may split an existing loan into two pieces. In this scenario, a lender could, for example, take a $100 million loan and set $30 million of that aside as a “‘B’ loan,” treating it as a different loan.