Reuters reported that U.S. banks are keen on reworking commercial real estate loan terms to avoid defaults and mitigate near-term losses. The move comes at a time when investors are concerned about potential losses of tens of billions of dollars from commercial real estate loans. Analysts state that banks are providing loan extensions and modifications, selling derivatives to fix interest costs, and offering subsidized loans to investors to acquire default loans. - Banks are optimistic that such measures would allow clients to navigate through this period of uncertainty and help refinance their properties in the future when interest rates are low.
- Some analysts believe the extend and pretend tactic adopted during the great financial crisis in 2008 could be tested if stress in the sector intensifies.
- According to Steve Jellinek, head of CMBS research at DBRS, CMBS special servicers oversaw a total unpaid principal balance of $12.74B in office loans in June, a significant increase from last year's $5.51B.
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