Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Register

5 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 have Australian living standards 'fallen' and how do we fix it?

For the last few years there has been much talk of a 'cost-of-living' crisis in Australia and of 'falling living standards'. Lately this has flared up again with the pickup in inflation resulting in a renewed fall in real wages.

Will you run out of money in retirement?

Fear of running out has become a defining retirement anxiety. Why do some retirees die with substantial wealth while others deplete their nest egg? Evidence suggests the answer is more complicated than we think. 

Four options for an income investor’s next dollar

What if Australia’s golden age of dividends is ending? Rather than overhaul your portfolio, it may be worth considering where new capital can work harder. I discuss four income strategies and the trade-offs behind each.

The investment that sidesteps the new tax traps

Tax rules have changed, but many investors are still using yesterday’s strategies. Insurance bonds may offer advantages for those seeking greater control, tax efficiency and certainty about their wealth.

Welcome to Firstlinks Edition 674 with weekend update

What begins as appetite, grows into excess and ultimately ends in spectacle. Millions of investors just discovered this the hard way.

  • 6 August 2026

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.

Latest Updates

Retirement

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.

SMSF strategies

Who really loses from the SMSF borrowing ban?

The ban on borrowing to buy residential property inside a self-managed super fund was framed as closing a loophole for the wealthy. Yet ATO data suggests its effects may be felt more heavily on members with moderate balances.

Investment strategies

The investing rule that explains the next market crash

What if investment success depends less on picking the right assets and more on understanding the decisions of other investors? A principle borrowed from game theory offers a different perspective on markets.

Investment strategies

Gold: should you own the metal or the miners?

Gold is back in the headlines but investors may be asking the wrong question. Before deciding where prices are headed next, it's worth considering whether the investment you choose will deliver the outcome you're actually seeking.

Fixed interest

Global bonds markets are hiccupping

For decades, investors looked the other way as government debt ballooned. But a reckoning may be beginning. Bond markets are stirring and the consequences could reach far beyond markets into everyday life.

Property

Why investors are looking beyond traditional property sectors

A little-known corner of the property market may be quietly benefiting from powerful demographic and healthcare trends. Could this specialised sector offer investors something increasingly difficult to find: enduring demand?

Retirement

Retirement in reality - 6 months in

Is retirement really an identity crisis, or is something else at play? New insights challenge conventional thinking and reveal why some retirees struggle to fully embrace life after work.

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.