In an interview with IREI, Chris Duey, senior managing director and head of private real estate debt portfolio management at Principal Asset Management, shared his insights on the pending debt maturities and expectations for the real estate finance.
An estimated $2.1 trillion in commercial real estate loans are scheduled to mature between now and 2027, according to the Mortgage Bankers Association. This volume — spread across all traditional lending sectors — comes at a time when lending activity remains down roughly 26 percent from 2022 levels, “largely due to rapidly increasing interest rates, a reset of real estate values, and a material decline in investment sales activity,” said Duey.
The current interest rate environment has forced lenders to tighten standards across the board. “Borrowing costs have simply increased materially in a short amount of time, while real estate values have adjusted downward to reflect the higher interest rates,” said Duey.
