National + Finance | May 24, 2023

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.

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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