They're known as "shadow lenders" and they're circling distressed CRE assets as the lenders of last resort, offering cash deals for refinancing at higher rates than the diminishing number of financial packages available from traditional banks and the bond market.

Regional banks, who are still absorbing the impact of the collapse of SVB and Signature banks, are scaling back on lending to the CRE market—regional banks originate an estimated 70 percent of the commercial real estate loans made by US banks—as they shrink their balance sheets to reduce risk, Bloomberg reported.

The other primary source of financing for property owners, the CMBS bond market, also is shutting the window on new loans. Data compiled by Bloomberg indicates that issuance of CMBS bonds has dropped 82% YOY in 2023. About $6B in new CMBS was issued in the first quarter, compared to more than $50B for all of 2022.