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Our buddies at Visual Capitalist hit us with a timely graph yesterday, actually one we’ve been waiting.
Two items of importance 1) Commercial Loans are not of interest rate terms like 15-30 years, more common 1-5 years in fixed interest rates and then a refinance 2) not all Commercial loans are the same i.e. Office, Industrial, Retail ect… Office is what is of interest… see next
Followers may recall we’ve spoken about the Kastle back to work index many times. As of just recently this index of office dwellings and actual accurate head count of people gong back to office buildings due to their watchful security systems, finally jumped over 50% as compared to 2019.
With a large refinancing, wall of commercial real estate holdings coming due in the next quarters, concentrated holdings of these loans in certain assets of banks are worth keeping an eye on.
Commercial Real Estate holdings a.k.a. C.R.E, of large banks
What stands out to us is other than the New York community Bank (see recent chart next), which has already been in the headlines, most banks seem to have a nominal holding, which is fantastic news.
From Visual Capitalist
As these loans get rolled and refinanced at much higher interest rates, it will be interesting to watch any sales of the properties if any, to see if their valuations changes. In most cases, a hope for lower rates would be much desired, although back to our Kastle index, does not look like workers are going to flood back to offices anytime soon.
Have a Great “CRE Loan Roll Watch” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
