Commercial Real Estate Debt

Primary Collateral

Real estate and related assets (fixtures, equipment, accounts, receivables, inventory, general intangibles, supplies)

Loans Maturing 2025

$570 billion

Loans Maturing 2026

$460 billion

Total Outstanding Loans

$4.7 trillion (as of 2024, according to Mortgage Bankers Association)

Common Financing Sources

Banks, debt funds, insurance companies, CMBS conduits

Loans Maturing 2024-2026

Approximately $2.0 trillion

Largest Share of Maturing Loans

Multifamily (approximately 33%)

2023 Mortgage Borrowing and Lending

$429 billion

Decline in Borrowing (2023 vs 2021)

52% decrease from record $891 billion

Decline in Borrowing (2023 vs 2022)

47% decrease from $816 billion

Key Drivers of Decline in Borrowing

Decrease in borrower demand due to slowdowns in sales transactions and refinances; higher interest rates

2010

2021

2022

2023

2024-07-15

2024

2025

A version of this article appeared in the Dallas Business Journal on July 15, 2024. From rising interest rates to declining asset values to higher cap rates to slowing tenant demand, the commercial real estate sector faces a growing number of challenges. The abrupt slowdown in financing is particularly troublesome for US real estate markets as a growing number of loans approach maturity and potential economic recession risks remain. [...] With roughly $4.7 trillion in outstanding commercial real estate loans, according to the Mortgage Bankers Association (MBA), disruption in the market can have wide-ranging implications as prior recessions have shown. [...] In 2025, an additional $570 billion in loans are scheduled to reach maturity, followed by $460 billion in 2026. In total, approximately $2.0 trillion of commercial real estate mortgages are scheduled to reach maturity from 2024 through the end of 2026. The largest share is multifamily, accounting for approximately 33% of maturing loan volume.

With over $3 trillion in commercial real estate assets having debt coming due in 2025, many investors are weighing their next move. While global markets stand ready with capital for quality assets, the landscape has changed. Success comes down to timing and strategy—whether that’s traditional refinancing, bringing in investment partners or exploring new approaches. The earlier you start planning, the more options you'll have. JLL’s global reach and deep market intelligence help private [...] Here are some of the strategic options for private investors looking to make smart decisions as their loans come due. Refinancing with the right debt sources Global capital sources including banks, debt funds, insurance companies and CMBS conduits offer private investors a range of options depending on their business needs. Alternative debt structures allow investors to pool multiple capital sources through a single loan with greater flexibility. [...] Across all markets, private investors can invest directly or through family offices, and partner with well-connected debt experts to source capital from banks, insurance companies, and debt funds. Investors can additionally bolster their capital stacks by tapping into new equity sources with family offices as their fund managers. This gives property owners greater flexibility and more time to decide whether they want to do a complete loan refinance or extend their existing debt, such as with an

Commercial real estate borrowing has been in major decline over the past three years. The Mortgage Bankers Association (MBA) reports that in 2023, total commercial real estate mortgage borrowing and lending reached $429 billion, a 47% decrease from $816 billion in 2022 and a 52% decrease from the record $891 billion in 2021. This decline has impacted all asset classes and capital sources, indicating a decrease in borrower demand due to slowdowns in sales transactions and refinances. Property [...] Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, stated, “The sustained growth in the amount of CRE mortgage debt outstanding signals that much of the drop in originations was driven by a decline in borrower demand stemming from slowdowns in sales transactions and refinances.” [...] This tried-and-true method of securing commercial real estate funding via funds borrowed from financial institutions has routinely been a viable option for obtaining capital. By financing most of the needed capital, developers can maintain control without needing outside investors. Standard debt also provides a structured and forecastable repayment schedule. However, higher interest rates are causing the cost of capital to become more expensive and deterring some deals. When interest rates were

The other common COD exclusion provision for real estate companies is an indebtedness discharge related to qualified real property business indebtedness. The term “qualified real property business indebtedness” is defined in Sec. 108(c)(3). To meet the definition, the indebtedness must be connected with real property used in a trade or business that is secured by the property. It must also be acquisition indebtedness if incurred or assumed after Jan. 1, 1993. In the case of property owned by a [...] In a Title 11 bankruptcy case; When the taxpayer is insolvent; When the indebtedness discharged is qualified farm indebtedness; If the taxpayer is not a C corporation a nd the indebtedness discharged is qualified real property business indebtedness; or The indebtedness discharged is qualified principal residence indebtedness that is discharged or subject to a written arrangement before Jan. 1, 2026. [...] _Nonrecourse debt_: If the debt is considered nonrecourse debt, the Supreme Court’s _Tufts_ decision (461 U.S. 300 (1983)) resolved the main issue regarding the tax treatment of a foreclosure (or deed-in-lieu-of-foreclosure) transaction. Such a transaction is treated as a deemed sale by the borrower to the lender with proceeds equal to the nonrecourse debt. Consequently, no debt discharge income results. A 1988 federal appeals court decision (_Allan_, 856 F.2d 1169 (8th Cir. 1988)) concluded