Liquidity gridlock worsens in US commercial real estate sector

Borrowing costs for the CRE market have risen more than income, a situation prompted by the steepest jump in interest rates in decades. — Reuters

PRIVATE lenders, in pole position as high interest rates leave them as the sole option for many in the commercial real estate market (CRE), are turning more selective and worsening a liquidity gridlock in a sector facing trillions of dollars of maturing debt.

Banks looked to rework terms on maturing CRE debt to stave off loan defaults, but they required additional infusion of equity capital allowing private lenders an opportunity to provide rescue financing through mezzanine debt, preferred equity or fresh common equity.