Policy Issues

Roundtable Urges Federal Bank Regulators to Reestablish CRE Troubled Debt Restructuring Program

March 17, 2023

Download Letter

The Real Estate Roundtable requested federal bank regulators to reestablish immediately a troubled debt restructuring (TDR) program for commercial real estate that would give financial institutions increased flexibility to refinance loans with borrowers and lenders.

 Roundtable Liquidity Concerns 

  • The letter from Real Estate Roundtable President and CEO Jeffrey DeBoer cites rising interest rates, a steady increase in looming debt maturities, remote work’s negative influence on office space demand, and heightened uncertainty from this week’s bank turmoil as contributing factors that have exerted pressure on liquidity and decreased refinancing options for CRE assets.
  • DeBoer also stated, “Regulators have taken significant action four times since 2009 to assist commercial real estate loan modifications during periods of economic instability—and now is the time to take action again. Our request is for immediate action, given the overall credit market and liquidity constraints. Time will allow markets still struggling with post pandemic uncertainties to stabilize.”
  • Minutes from last month’s Fed Open Market Committee meeting confirmed economic pressures on CRE assets. The FOMC minutes state, “In particular, the staff noted that measures of valuations in both residential and commercial property markets remained high, and that the potential for large declines in property prices remained greater than usual.”

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