The United States is nearly three years into the economic recovery that began in the summer of 2009, and only now is the U.S. commercial property sector beginning to show tangible signs of progress on the historical deleveraging that has weighed on the market and the broader economy since 2007.

For several years, both lenders and borrowers have engaged in a mutually beneficial exercise commonly known as “extend and pretend” to avoid acknowledging the painful reality of loss on the part of both parties. In fairness, the premise behind the prolonged period of extensions was quite simple — to push the problem forward until:

• The economy became stronger and property income improved;

• Lender balance sheets became better positioned to absorb losses; and

• Losses shrank to a more manageable size.

Unfortunately, the economic recovery has been far weaker tha