Commercial real estate valuations have been hit over the last 18 months. Inflation, the Federal Reserve's response of interest rates hikes, growing operating expenses, previously swollen values, and a lack of transactions undermining price discovery have all done their part to down prices.

That puts investors into a barrel of pickle brine. They may be holding CRE assets that have plummeted in value while refinancing options are tighter, demanding higher interest rates and lower LTV ratios. Selling in a down market could lead to fire sale prices when markets might eventually recover, especially if the Fed cuts interest rates.

One enormous investor, the California State Teachers' Retirement System, or CalSTRS, is considering a new policy of borrowing up to 10% of its $318 billion portfolio value to preserve liquidity without dumping assets, as Bloomberg first reported. It also would allow for the temporary rebalancing of asset allocations that would enable opportunistic purchases of more properties. For CRE, that would be plus or minus 5% against a long-term target allocation of 15%.