Research firm CrediFi released a report this month that found CRE loans make up a larger portion of banks’ balance sheets than had been publicly disclosed. Beyond that, fewer banks are packaging those loans into commercial mortgage-backed securities since the CMBS market was rocked by the Great Recession.
Combined, those two factors add up to lenders having more risk exposure than they are perhaps willing to admit, according to CrediFi CEO Ely Razin.
“The optimists are missing data,” Razin told Bisnow. “A lot of what you hear in the marketplace is sentiment based on gut feeling and deal flow, and as long as they keep flowing, the dance keeps going. And that’s true until the music stops.”