Long-standing predictions that many CRE loans would eventually get into trouble might be right. CRED iQ looked at data over the last three years across CMBS, SBLL, CRE CLO, and Freddie Mac loans.

There was “steep growth in modifications” over this period, with 2,778 loans at a total balance of $35.5 billion that were modified through a “lumpy pattern but consistent overall growth," according to the findings. Filings varied from 52 properties in January 2022 at $584.1 billion in balances to only five properties ($157.5 million) in January 2023. December 2024 saw a higher number of loan modifications, comprising 347 loans and $1.1 billion in value. The highest loan value was in April 2024.

There are some examples of the current dynamics. Energy Centre is a 757,275-square-foot office property in the French Quarter of New Orleans. Backing a $53.3 million loan, there’s also an additional $8.7 million in mezzanine financing. Fast-approaching monetary default set off a transfer to a special servicer in September 2023. The extension of the loan supposedly closed in October 2024, but there is no new updated maturity. The valuation grew from $83.6 million at origination to $92.6 million last January. As of December 2023, DSCR was 1.75, and occupancy at the end of 2024 was 86%. Those numbers would seem to support the ability to pay debt service, but would it qualify for refinancing?