Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Register

26 September 2026

Home / White Papers 2023

Another banking crisis – how are REITs positioned?

Executive summary

The recent failure of several regional US banks and Credit Suisse has triggered concerns about the impacts for commercial real estate (CRE) markets as, to varying degrees, these financial institutions are an important source of finance.

  • Banks account for around half of total CRE mortgage debt outstanding in the US.
  • The top 25 banks account for approximately 15% of total CRE mortgage debt outstanding, and those loans represent only 5% of the assets of these banks.
  • Smaller banks (of which there are over 4,600 in the US) account for around 38% of total CRE mortgage debt outstanding and represent a more meaningful 25% of the assets of these banks.
  • Excluding lending to owner occupied properties and farmland, loans from small banks account for around 8% of the total estimated value of income-producing CRE in the US.

After a period of easy money and historically low real estate loan defaults, we do expect heightened credit losses as the market returns to more moderate monetary and fiscal policy settings impacting tenants, landlords and financiers. This should be viewed as a return to ‘normal’.

Crucially at this point, we see limited signs of excess specific to the commercial real estate sector which would cause systemic failure. Furthermore, in general, the listed REIT sector appears to be at least relatively well positioned.

However, there are reasons for vigilance. Clearly, for a variety of reasons, the US office market is an outlier as it faces something of a crisis which could trigger broader ramifications. Moreover, there is limited visibility on the private lending market where higher leverage could cause distress and capital flight.

This report seeks to provide context around:

  1. the magnitude of these issues for U.S. commercial real estate generally
  2. the state of the REIT market with a particular focus on the situation in the U.S.; and
  3. a focus on US office, the sector most at risk

Overall, whilst it will be far from easy, we find that there are important differences between the current malaise compared to the credit crunch that led the Global Financial Crisis. Furthermore, listed REITs are well placed to capitalise on any distress that may arise in the broader real estate investment market.

Download the full paper

  •   4 May 2023
  •      
  •   

 

Leave a Comment:
Firstlinks is sponsored by:
banner

Most viewed in recent weeks

Why spending more in early retirement can improve lifetime income

Conventional wisdom encourages retirees to preserve superannuation. But if those likely to qualify for the Age Pension later in life spend a little more today, it may deliver higher lifetime income and a more stable retirement.

Testamentary trusts have secured the CGT exemption

Treasury’s latest CGT reform draft delivers a win for testamentary trusts and deceased estates, exempting estate-derived gains from the 30% floor. However, questions on death and divorce rollovers remain unresolved.

Meg on SMSFs: What do we think about reversionary pensions these days?

Reversionary pensions have long been a staple of SMSF estate planning, but are they still the best option? Meg Heffron revisits a once-clear favourite and asks whether changing super rules have shifted the balance.

Is it time to bail on Australian stocks?

For generations, Australian investors have backed banks, miners and dividends. But has that loyalty come at a cost? A look at the numbers raises an uncomfortable question about where future returns will come from.

How does the 4% rule stack up?

The 4% rule has long been retirement's gold standard. But after a difficult period for investors, fresh analysis suggests a more conservative approach may significantly improve the chances of making savings last.

Testamentary trusts survived the trust tax. The drafting battle has just begun.

The fight over testamentary trusts looked settled. Then the draft legislation arrived. Hidden in a technical detail is a question that could force many families to rethink wills they thought were already future-proof.

Latest Updates

Planning

How the typical Australian Family could save $844,350 in taxes

The value of a testamentary trust is not determined by wealth alone. Depending on circumstances, it can reduce the tax burden on inherited income, create efficiencies and help build intergenerational wealth.

Superannuation

There's a reason why your super is locked up until your 60s

For decades, it seemed settled. Then one controversial idea reignited a debate that could reshape the financial future of millions. The real question isn’t who’s right or wrong, but whether a long-held assumption deserves another look.

Property

The housing slide could become a crash

House prices are sliding across Australia, yet the most dangerous ingredient for a housing crash is still missing. If job losses surge amid growing economic risks, today's correction could become a historic property downturn.

Retirement

Under-retiring: The greatest retirement risk in a generation

Two retirees. Similar savings. Completely different lives. New research from Challenger reveals why some Australians confidently spend in retirement while others hold back and the overlooked factor shaping retirement decisions.

Five risks to watch in markets

Things you may often hear are: a recession is around the corner, markets are overpriced, the AI sector is about to flop at any moment. It’s like the never-ending laundry pile that sits in my house, it never really disappears.

Investment strategies

Do you qualify as ‘rich’?

What does it mean to be 'rich'? For something so universally desired, it is surprisingly difficult to define. That ambiguity creates a challenge for investors and raises a bigger question about what financial success really looks like.

Investment strategies

If you’re worried about your bond portfolio, you’re missing the point

Most investors think they know what bonds are for. But when markets turn volatile, a surprising misunderstanding can lead to costly decisions. Here’s the overlooked lesson that could change how you view your portfolio.

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

Site Map

About Firstlinks

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.