44% of U.S. Office Loans Underwater

Bisnow 12/19/23 reported that according to data from the National Bureau f Economic Research, 44% of bank loans are on property values that are less than the outstanding loan balances. This means that even if the lender is willing to refinance, which most these days aren’t, they will require the borrower to pay down the loan so that there is still equity on the table. This may also impact a number of smaller banks who run the risk of solvency runs. Yesterday the SF Business Times reprted that a Class A 347,000 square foot two-building office complex in Concord at 1320-1390 Willow Pass Road sold for $58/sf!!! A new low for any Class A office building in the Bay Area! The seller had previously paid $183/rsf in 2017.