Navigating the Current Distressed CMBS Market: Strategies for Borrowers and Lenders; Opportunities and Challenges

With the wave of CMBS loans coming due, a dramatic increase in the special servicing rate, and a spike in delinquency rates, the CMBS market is showing signs of significant distress. Despite this distress, the CMBS issuance rate remains strong. These market conditions have created both challenges and opportunities for borrowers, lenders, and investors. 

In the current market, when a CMBS loan misses its maturity date, many lenders and borrowers have engaged in loan modifications, extensions, or even foreclosure. The most common resolution has been a loan extension to grant the borrower temporary relief in hopes that their financial situation will improve. An extension also allows a lender to potentially delay big losses. However, loan extensions are adding stress to an already distressed market because the balance of unresolved debt continues to grow. 

Counsel for lenders and borrowers must carefully consider the ramifications of loan modifications and extensions in conjunction with other economic factors such as rising interest rates and declining property values which have left some borrowers in a negative equity position. 

Listen as our authoritative panel discusses the current state of the CMBS market and evolving trends and provides strategies for both borrowers and lenders to prepare and respond to distressed loans.