Wednesday, September 28, 2022 4:57 am

Coronavirus fallout to test Phoenix commercial real estate industry’s ‘extend and pretend’ limits

By Craig M. Douglas and Corina Vanek | Phoenix Business Journal

The last time the U.S. economy was in crisis, terms such as “jingle mail” and “extend and pretend” became commonspeak among the thousands of men and women earning their keep in the commercial real estate sector. What’s unfolding today in the age of the coronavirus undoubtedly will add to that insider vocabulary, and then some.

A Business Journals analysis of the commercial real estate market identified 4,600 properties nationwide securing $30 billion in commercial mortgage-backed securities, or CMBS, debt coming due in the next six months. With the global economy in a tailspin and nary a sign of it stabilizing, the likelihood those loans will be paid in full — whether through refinancing or property sales that can satisfy lenders — is slim.

The shrapnel from this ticking time bomb will be absorbed in virtually every major metropolitan area in the country. In Washington, D.C., some $1.8 billion in CMBS debt secured by 67 properties is coming due by Sept. 30. In Los Angeles and Boston, the totals are $1.46 billion and $1.31 billion, respectively, and the combined number of affected properties is 240.

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