Commercial Investors → What’s the Toughest Part of Financing?

[Drago Stanimirovic]

For those investing in retail, office, or multifamily, what’s been the bigger challenge: loan structure, down payment, or timing deals with the current market?

[Don Konipol]

Quote from @Drago Stanimirovic:

For those investing in retail, office, or multifamily, what’s been the bigger challenge: loan structure, down payment, or timing deals with the current market?

Nationwide prices of office buildings have declined 40% + in value since January 2025.  Rents have fallen about 50%.  This is average across all markets - some markets much worse.  As leases expire or rental default occurs, cash flow is negative at ANY interest rate with current principal balance of existing mortgage notes.  

This is NOT a change brought on by interest rates, general economy, etc.  this is a structural change.  Same for second tier and third tier retail malls.  

Office Properties Investments is an office REIT that in the last 2 years has seen its share price go from $16.00 to $0.18!  The REIT had what 5 years ago seemed like a high but manageable 60% LTV for its debt.  The market value of its office buildings fell 45% +, therefore WIPING out shareholder equity.  Just took the market a few years to realize it.

Converting real property to a different use is extremely expensive and time consuming, and doesn’t often “pencil out”.