A $90 Billion Debt Wave Shows Cracks in U.S. Property Boom

"There are a lot more problem loans out there than people think," said Ray Potter, founder of R3 Funding, a New York-based firm that arranges financing for landlords and investors. "We're not going to see a huge crash, but there will be more losses than people are expecting."

...

The winners and losers of a lopsided real estate recovery will be cemented as the last vestiges of pre-crisis debt clear the system. While Manhattan skyscraper values have surged 50 percent above the 2008 peak, prices for suburban office buildings still languish 4.8 percent below, according to an index from Moody's Investors Service and Real Capital Analytics Inc. Borrowers holding commercial real estate outside of major metropolitan areas are now feeling the pinch as they attempt to secure fresh financing, Potter said.

...

The maturity wall has been whittled down to about $90 billion from $250 billion in 2008, according to data from Morningstar. The firm estimates that roughly half of the remaining loans will have difficulty refinancing. S&P analysts are predicting that about 13 percent of real estate loans coming due will ultimately default, up from 8 percent over the past two years, according to Dennis Sim, a researcher at the firm. That's their base case, but the default rate could be higher, he said.