Commercial lending

High vacancy rates in U.S. office markets and the impact of rising interest rates on property values in Europe have prompted a brutal selloff in publicly traded real estate stocks and bonds.

Cullen/Frost, Columbia, Synovus, Valley National and Associated all have relatively large exposures to the office sector, which has been hurt by the popularity of remote work. Their executives point to factors that offer protection, including the geographic composition of their portfolios and the types of buildings that serve as collateral.

The amount of distressed assets rose 10% in the first three months of the year, according to a new report from MSCI Real Assets.

The construction manager for the beleaguered New Jersey mall is suing JPMorgan Chase & Co. to recover more than $30 million of unpaid work and accrued interest.

The American Bankers Association's Economic Advisory Committee said access to loans is likely to further soften, while defaults and credit losses could increase in the second half of the year.

New loan acquisitions fell to their lowest level since 2020, but companies also grew shares of residential securities noticeably over the past three years, S&P Global Market Intelligence said.

The work-from-home phenomenon spawned by the Covid-19 pandemic and a slowing economy are pushing tenants to cancel or not renew leases, making building owners miss loan payments.

Both loan demand and credit availability have contracted sharply, according to senior executives at several of the nation's largest banks. Their comments came against the specter of a potential recession.

When the once-ubiquitous interest rate goes away at the end of June, some businesses that have older loans may see a sudden jump in their payments. Banks, lawyers and business leaders are doing last-minute work to avoid that scenario.

The San Francisco-based bank is proactively managing its loan portfolio and working with borrowers to restructure terms with the goal of helping clients and minimizing risk, he said.