As interest rates remain elevated and capital markets tighten, a growing number of real estate owners are facing challenges they hadn’t anticipated—loan maturities with no takeout, cash flow disruptions, and lender fatigue. While not all assets are distressed, many are at a crossroads.
At Edgewater Lending, we’ve compiled a roundup of what we’re seeing in the market—from bankruptcy filings and foreclosure trends to the types of financing that are stepping in when traditional sources step back.
1. The Rise of Maturity-Driven Distress
Across asset classes, a common driver of distress is no longer underperformance—it’s loan maturity. Many loans originated in 2019–2021 with short terms and interest-only structures are now coming due, and higher rates have drastically changed the refinancing math.
According to recent reports from Trepp and MBA:
- Billions in commercial loans are maturing monthly through 2025
- Refinancing is becoming harder, even for stabilized properties
- Debt service coverage ratios (DSCRs) are falling short of lender requirements
- Lenders are less willing to extend or modify terms
Where we see risk:
- Office properties in secondary markets
- Retail centers with lease rollover
- Multifamily projects that haven’t hit pro forma
2. Bankruptcy Filings Are Quietly Increasing
While high-profile bankruptcies make headlines, it’s the steady uptick in small-to-mid-size filings that’s telling. Many borrowers are using Chapter 11 as a means to buy time, preserve equity, or negotiate with creditors when no refinancing is available.
We’re seeing an increase in:
- Single-asset real estate bankruptcies
- Condo and HOA-related distress (often due to deferred maintenance and unpaid assessments)
- Borrowers filing strategically to pause foreclosure and gain negotiating leverage
3. Foreclosure Activity Is Creeping Back
Foreclosure volumes are not yet near 2008–2010 levels, but filings are increasing—particularly for non-bank loans, private debt, and properties in judicial foreclosure states. Many of these are triggered by lenders unwilling to extend or renew, not necessarily by borrower mismanagement.
4. What’s Filling the Financing Gap
With banks sidelined, bridge lenders and specialty finance groups are stepping in to provide capital where it’s most needed:
Common solutions filling the gap:
- Bridge loans to refinance maturing debt
- Debtor-in-Possession (DIP) financing during Chapter 11
- Exit financing for confirmed reorg plans
- Cash-out refinance to settle creditor claims or fund improvement work
- Rescue capital for deals near foreclosure
At Edgewater Lending, we’re seeing most demand from borrowers who are:
- In active negotiations with lenders
- Facing maturity with no refinance lined up
- Entering or exiting bankruptcy
- Stabilizing assets post-construction or renovation
Takeaway: Real Estate Distress Is Evolving, Not Exploding
While the market isn’t experiencing a collapse, targeted distress is very real. The common thread? Liquidity challenges that, with the right structure and timing, can be solved.
That’s where we step in—with customized capital to preserve value and time.
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