Fitch: CRE Refi Risk Extends Beyond Office Loans
Although the U.S. office sector has garnered intense investor and lender focus given the secular demand challenges posed by flexible work, the risks that higher interest rates pose to U.S. commercial real estate are much broader, spanning most property types, according to Fitch Ratings.
“The roughly $3 trillion-plus commercial office sector is one of the largest CRE property types, but still only comprises a low-teen percentage of the total estimated U.S. CRE value,” Fitch reported. “Enclosed retail, full-service hotels and multifamily are property formats with higher refinance risk that also warrant scrutiny.”
A recently published refinance scenario analysis of Fitch-rated U.S. CMBS transactions showed that loans backed by retail, hotel and mixed-use properties all showed greater refi risk than office. “Indeed, the percentage of office loans able to refinance exceeded the average across all property types for all three scenarios,” according to Fitch.