CRE Loan Modifications: Q3 Report
In the dynamic landscape of commercial real estate (CRE), loan modifications serve as a critical indicator of market stress, borrower resilience, and sector-specific challenges. As of the third quarter of 2025, data from CRED iQ reveals the ‘extend and pretend’ trend continues.
This analysis draws from a dataset encompassing modified loans totaling approximately $11.2 billion in ending balances, spanning July through September 2025. While modifications can range from maturity extensions to forbearance agreements, the trends highlight vulnerabilities in certain property types and a concentration among larger loan sizes. Below, we delve into these patterns, offering insights for investors, lenders, and market participants.
Overview of Recent Modification Activity
Before breaking down by property type and loan size, it’s worth noting the broader context. By category, maturity date extensions dominated, accounting for 101 loans and 67% of the loan balance, underscoring a prevalent strategy to defer repayments rather than restructure fundamentally.
Modifications by Property Type
Property types exhibit varied exposure to modifications, with hotels leading in balanced impact, while multifamily properties show higher loan counts. Here’s a breakdown:
- Hotels: This sector tops the list with 53 loans modified, totaling $5.5 billion
- Office: 36 loans amounting to $1.4 billion
- Multifamily: Leading in volume with 55 loans, but a balance of $1.4 billion
- Mixed Use: 20 loans for $891.9 million
- Retail: Only 6 loans totaling $156.2 million
- Self Storage: 3 loans for $150.0 million. This niche sector shows minimal modifications, aligning with its reputation for steady demand and lower volatility.
- Industrial: 5 loans totaling $55.8 million
These figures illustrate a clear hierarchy: hospitality and traditional office spaces are bearing the brunt, while industrial and storage sectors remain outliers in stability.
Modifications by Loan Size
Shifting to loan size buckets, the data underscores a skew toward larger loans, which dominates the modified balance.
- $100M+: 50 loans totaling $5.9 billion. This bucket alone accounts for over half the modified value, suggesting mega-loans are disproportionately affected.
- $50M-$100M: 38 loans for $2.5 billion Mid-to-large loans here contribute significantly
- $20M-$50M: 73 loans amounting to $2.3 billion The highest count but lower balance percentage implies a broader distribution of mid-sized modifications.
- $10M-$20M: 24 loans for $670.4 million, showing a smaller impact
- Less than $10M: 30 loans totaling $145.9 million. Minimal balance weight, indicating smaller loans are less frequently modified or resolved through other means.
Key Takeaways and Implications
The Q3 2025 data paints a picture of targeted distress in CRE, with hotels and offices leading modifications by property type, and larger loans ($50M+) comprising over 74% of the balance. Stay tuned to CRED iQ for deeper dives into CRE data and analytics. For custom insights or full datasets, visit our platform.
About CRED iQ
CRED iQ is a market data provider that offers a robust suite of data and software solutions tailored for commercial real estate and finance professionals.
With over $2.3 trillion of CRE loans, CRED iQ delivers instant access to a comprehensive range of financial data and analytics for millions of properties in every market. CRED iQ’s data and analytical capabilities are instrumental in helping investors, lenders and brokers make informed and strategic decisions critical to their business.
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