Waiting to Exhale: Commercial Real Estate Lending and Small Banks

Stephen L'Heureux, CFA, Portfolio Manager, Global Commercial Real Estate & CMBS Strategist, Mortgage & Structured Finance and Julian Wellesley, Senior Credit Research Analyst

Throughout 2023, our analysts opined on risks related to commercial real estate (CRE) and their lenders. There was plenty to say about these sectors amid high vacancy rates, rising inflation rates, higher interest rates and the failure of three mid-size US banks and one large foreign bank—circumstances that left many investors holding their breath and wondering if there would be another shoe to drop.

US bank failures

In the following Q&A, two seasoned investment professionals, Stephen L’Heureux, a global commercial real estate portfolio manager and CMBS strategist, and Julian Wellesley, a senior bank credit research analyst, bring us up to date on the intersection of CRE and banks and whether it’s time to exhale.