Why Can a CRE Deal Collapse?
An Analysis of
Transaction-Level Data After a decade of thriving growth bolstered by low interest rates and easy credit, commercial real estate has hit a wall. Valuations have been falling since the pandemic brought about lower occupancy rates and changes in where people work and how they shop. The Fed’s efforts to fight inflation by raising interest rates impacted the industry’s ability to fund deals and placed pressure on liquidity. According to Goldman Sachs, recent banking stress further added to these woes, where about 80% of all bank loans for commercial real estate deals come from regional banks. In the following analysis, we look at data from 1,747 Matthews™ transactions (closed and dead) to determine why a promising deal can collapse.
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