CRE Loan Modifications Surpass $39B
The commercial real estate landscape is experiencing a transformative wave with loan modifications soaring to nearly $40 billion over the past three years. Our research team at CRED iQ examined the evolving landscape of loan modifications across commercial mortgage-backed securities (CMBS), single-borrower large loans, collateralized loan obligations and Freddie Mac loans focusing on both recent activity and a three-year cumulative view. By analyzing loan counts and balances, we identified patterns that highlight the market’s volatility and resilience.
Loan modifications jumped from $21.1 billion in March 2024 to $39.3 billion by March 2025, reflecting a steep upward trajectory. March saw $2 billion in recorded modifications across 47 loans, marking the largest surge since May 2024.
Modification activity has been uneven, ranging from a low of $11.3 million (two properties) in July 2022 to a high of $2.4 billion (632 properties) in July 2023. These numbers underscore a market grappling with uncertainty, where “extend and pretend” strategies — extending loan terms to delay resolution — are becoming a go-to solution.
A standout example of this trend is the iconic Willis Tower, a 3.8 million-square-foot office building in Chicago’s West Loop. Backed by a $1.33 billion loan ($350 a square foot), the interest-only loan was originally set to mature in March 2020, with five one-year extension options. In March 2025, the loan was modified, pushing the maturity date to March 2028.
At underwriting in February 2018, the property was appraised at $1.78 billion ($470 a square foot). As of the latest data, it maintains an occupancy rate of 83.1 percent and a debt service coverage ratio (DSCR) of 1.32, signaling steady performance despite market headwinds.
The surge in loan modifications points to a broader shift in CRE financing. As market uncertainty persists, lenders and borrowers are opting for flexibility over immediate resolution, extending maturities to navigate challenging conditions. This trend raises important questions for lenders in terms of how prolonged modifications impact asset valuations and portfolio strategies, and for lenders what adjustments to financing structures are needed to balance risk and opportunity.
The CRE sector is at a crossroads, with nearly $40 billion in modified loans signaling both caution and adaptability. As these trends evolve, staying informed will be critical for stakeholders navigating this dynamic market. At CRED iQ, we’ll continue to track these developments and provide actionable insights to guide your decisions.
Mike Haas is the founder and CEO of CRED iQ.
