By the numbers: FSOC
highlighted delinquency performance in CRE bank loans and CMBS.
- CRE delinquency rate at U.S. banks was 0.81% in Q2
2023, up from 0.74% in Q2 2022.
- Conduit CMBS delinquency reached 4.3% in Sep.
2023, up from a post-pandemic low of 3.5% in April 2023.
FSOC lists
several recommendations for supervisors, financial institutions, and investors
to address CRE risk:
- Closely monitor CRE exposures and concentrations,
and track market conditions.
- Evaluate loan portfolios’ resilience to
potential stress, ensure adequate credit loss allowances, assess CRE
underwriting standards, and review contingency planning for a possibly
protracted period of raising loan delinquencies.
- Study “interlinkages” among financial
intermediaries in the CRE market, including banks, insurance companies,
REITs, and private lenders. FSOC notes that these exposures could amplify
financial stress in the sector and that regulators should collaborate to
better understand the dynamics.
Contact Sairah Burki (sburki@crefc.org) and David McCarthy (dmccarthy@crefc.org)
with questions.