Moody’s Analytics Tries to Handicap Office Economic Vulnerability

Last week, Moody’s Analytics pointed out that moderate changes to office cap rates and cash flows could cause big problems. This week, the company digs in more to recognize that a threat for CRE isn’t uniform and the question those in the industry should look at is vulnerability and how much sway concerns with banks could hold.

For example, there is the number that $2.3 trillion in commercial real estate debt is held by “small” banks. First, says Moody’s, look at the entire field of CRE financing. The firm built up and then whittled down the totals, looking at Mortgage Banker Association estimates, and ended with $1.75 trillion of income-producing real estate held by FDIC-insured entities.