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Moody’s Thinks Looming CRE Loan Maturities Are Fine

Moody’s believes the US banking system can weather the incoming wave of loan maturities into 2025.

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Good morning. Moody’s believes the US banking system will be able to weather the incoming wave of loan maturities into 2025, even as rising delinquency rates are expected to continue this year.

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Moody’s: Bank CRE Loan Fears Are Overblown

Moody’s Ratings recently analyzed the credit metrics of 41 US commercial banks and determined most bank loans were, in fact, conservatively underwritten.

Some context: Despite the significant interest rate hikes since 2022, the rise in delinquency rates for bank CRE loans has been relatively mild this year. US banks currently hold around 38% of the $4.7T in outstanding CRE loans, while community banks actually increased (not decreased) their CRE loans by $40B (9%) in the past year.

Banks Hold Over a Third of US CRE/Multifamily Debt (Moody’s, FDIC, MBA)

Balancing act: Delinquent bank CRE loans have been gradually going up due in part to the Fed's hawkish decision to maintain a target rate of 5.25–5.50% at their latest meeting. Core CPI stood at 3.3% on June 21, below the 5.3% from last year, indicating the balancing act faced by the Fed in managing inflation vs. financial market stress.

Net Charge-Offs and Delinquencies Among Banks, by Bank Size (Moody’s, FDIC)

Zooming out: The US banking system remains resilient despite $440B in maturing CRE loans YTD, and more than $900B in maturities expected by EOY 2024. Average commercial bank loan-to-value ratios stand at 66–67%, showing sufficient reserves to withstand challenges like loan defaults or refinancing issues.

Office concerns: Of course, not all sectors are doing well. While overall US banking system distress remains low, Moody’s highlights that around 70% of bank office loans are expected to default at maturity. This impending issue, compounded by rising interest rates, may pose challenges to banks soon.


Optimistic outlook: The US CRE market saw a positive turn in 2Q24, with capital markets activity on the rise. Large multifamily, industrial, and non-mall retail deals are driving positive deal volumes, indicating a gradual recovery in lending activity. But with most CRE loans maturing by the end of 2025, banks must carefully navigate their office loans.


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✍️ Editor’s Picks

  • Latest stress test: Most large US banks could handle a severe recession with up to $685B in losses, including major losses in CRE, according to the Fed.

  • Economic slowdown: The US economy grew at a 1.4% annual pace in Q1, with consumer spending at 1.5%, impacted by persistent high interest rates.

  • Homebuyer headaches: Home prices are likely to remain high and could go higher, thanks to scarce inventory and no immediate relief from rising mortgage rates.

  • Licking wounds: Due to an ongoing class-action lawsuit, RealPage will lay off 4% of employees amid a growth push, cutting around 260 jobs.

  • Traffic trouble: US workers spend up to a whole workweek stuck in traffic each year, costing an average driver $733 annually. The timesuck itself also really adds over an entire career.

  • Big hike incoming: State Farm hopes to raise California homeowners insurance rates by 30–52% to prevent insolvency amid financial struggles.


  • Senior surge: The senior housing sector is facing a $275B development gap by 2030 due to high demand and limited financing options.

  • Highrise victory: Mitsui Fudosan received approval to build a 50-story downtown LA apartment tower with 580 units, retail space, and potential parking.

  • All roads lead there: Job growth in top US cities is slowing down, with an average of 4.6K new jobs per metro. NYC leads the nation with 100K new jobs.

  • Powerful revamp: Massport approved a $12M deal with HRP Group to develop a housing project at the former Boston power plant.

  • Heading West: Rose Equities is building One Metro West, a 1,057-unit complex in Costa Mesa, featuring apartments, offices, shops, and a park near LA.

  • Real estate rivalry: After a $186M deal went south, Kushner settled with the First Real Estate Investment Trust of New Jersey, paying $16.9M to end a four-year suit.

🏭 Industrial

  • Oversubscribed: Faropoint's Industrial Value Fund III raised $915M, exceeding its $750M goal and acquiring 80 urban warehouses in 12 markets.

  • Midwest shuffle: Prologis (PLD) made $535M from Midwest industrial property sales, following a large portfolio sale in Minneapolis.

  • Cold, hard cash: Global Net Lease (GNL) sold a portfolio of 9 cold storage properties to Americold Realty Trust (COLD) for $170M.


  • Retail revamp: Walgreens (WBA) plans to close a quarter of its stores nationwide, aiming to improve financial performance amid sector-wide challenges.

  • Retail revival: Brookfield (BN) and QIC are on the brink of refinancing a 92% leased 1.2MSF mall in Rancho Cucamonga with a $265M loan.

  • Fountain life: SBE Entertainment's Sam Nazarian will soon open a life longevity spa in LA’s Century Plaza, leasing 13KSF as part of the Reuben Brothers' development.


  • Deal alert: Howard Hughes Holdings Inc. (HHH) acquired Waterway Plaza II, a 55% occupied, 142.5KSF office building in The Woodlands, for $19.2M, aiming for $3M in NOI.

  • Coworking competition: The coworking sector is enjoying some much-needed relief. The 15 largest coworking operators have added 252 locations since December 2022.

  • Mortgage maze: Up to $75.74B in CMBS loans against office properties will mature by the end of the year, posing a significant refinancing risk.

  • Highrise revamp: Architect Scott Becker is leading a $27.7M renovation at 1 S. Wacker Drive by 601W in Chicago, which includes upgrades to multiple floors.


  • Green financing wins: A $90.4M C-PACE financing deal was secured for Hyatt Hotels (H) in LA, with $49M for Thompson Hollywood and $41.4M for Tommie Hollywood.

  • Revamping DFW: The city of Arlington, TX, contributed $4M towards a $54M upscale hotel redevelopment on Division Street, which is projected to generate $13M over 15 years.


According to Zumper’s latest National Rent Report, 1BR and 2BR rents both bottomed out and began rebounding in April. Rents for both unit types have gone up over the past two months, after sliding or staying flat every single month since June 2023.

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