Loans with negative leverage, where debt costs in a real estate deal exceed a property’s cash-on-cash return, surged to almost one-third of all CMBS loans in the third quarter, according to Moody’s.
“We’ll have to wait for the dust to settle in 2023 as the Fed’s plans to curb inflation play out and if the broader economy can continue to grow at or near potential to continue propping up CRE demand and rent growth,” Moody’s writes.
