And I also think the waters ahead for the regional banks will remain very choppy and worrisome if short-term rates stay at the 5.0%+ level. Loans on office properties are disproportionately issued by the smallest lenders, which have greater exposure to the sector than big banks and mid-sized regional lenders. “The smallest banks — those which few people have heard of — tend to be the most exposed to commercial real estate and are most at risk,” Wang said. “I don’t believe this crisis is systemic, as big banks and even most regional lenders have little exposure,” Wang added. “Those two factors will lead to a pretty significant decline in valuations.”The leading research firm analyzing commercial real estate debt, Trepp, has a front-row seat to the reckoning.

Source: Forbes May 23, 2023 11:03 UTC