The bank's deals indicate investor interest despite challenges from higher interest rates and falling prices
Canadian Imperial Bank of Commerce (CIBC) has arranged to sell US$316m of US office loans at a discount, as reported by BNN Bloomberg.
The bank reached agreements with several buyers for loans supported by eight US offices located in cities like San Francisco, Seattle, Phoenix, and Austin. This information comes from a source familiar with the situation who wished to remain anonymous due to the confidential nature of the process.
A CIBC spokesperson declined to comment on the transactions.
The commercial property sector, particularly office buildings, has been under pressure due to higher interest rates affecting property valuations. According to real estate data analytics provider Green Street, office property prices dropped by 16 percent over the past year.
Banks, including CIBC, have been looking to reduce their exposure to real estate. They see loan sales as a strategy to mitigate the growing pressures in their portfolios.
These recent deals from CIBC suggest that investors are willing to acquire office loans at attractive prices. In recent years, transaction volumes have been low as buyers and sellers struggled to agree on prices and high borrowing costs complicated economic evaluations.
Currently, there are more opportunities for transactions. Recent property deals, such as the sale of commercial-property debt from the failed Signature Bank, have provided better insights into property values.
As property debt maturities approach, more owners are compelled to make decisions about their buildings. While borrowing costs remain high, they have been relatively stable in recent months.
