Since rising interest rates spun many CRE loans into a desperate need for refinancing, borrowers and banks have been juggling conditions through an extend-and-pretend strategy. Just when a loan might move into default and cause a problem for both parties, terms get renegotiated to avoid the dilemma.
A new Gray Capital research brief, focusing mostly on multifamily, says that “extend and pretend is coming to an end as lenders and equity are growing impatient with borrowers.” Instead of fixing problems, the approach has kicked the can down the road. Too many borrowers have yet to raise the extra capital they need or find other financing to pay off their existing loans. Lenders and equity holders are looking for an end to holding what is now a risky liability. There is also only so long a company can hold a debt without writing it down.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
