Part 3/7:
With many commercial loans reaching maturity now, property owners face a harsh reality: their income does not rise with the escalating cost of debt. For example, a hotel loan initially based on a cash flow of $5 million at a 3.5% interest rate has morphed into a $7 million annual debt obligation at higher interest rates. Consequently, owners find themselves in a predicament where their property’s value declines despite its unchanged income.