Part 6/10:
Reuters recently reported that as of the third quarter, several US banks continued to experience delinquencies and stress related to CRE loans. Major institutions like Morgan Stanley and Goldman Sachs have specifically noted increased provisions for credit losses and reductions in CRE exposure, respectively. Goldman, for instance, reported halving its office-related CRE holdings this year—a move that likely came with incurred losses.
Approximately 70% of small to midsized US banks are exposed to CRE loans that are declining in value due to overwhelming vacancies and declining demand. These loans are not yet due for repayment, but as they begin to mature, the risk of default and significant losses could intensify.