Prices of Commercial Real Estate Bonds on the Decline

Prices of commercial mortgage-backed securities have declined to their lowest levels since the beginning of the pandemic. A rise in office vacancies and interest rates have investors worried that commercial real estate owners could default as work habits change. The Silicon Valley Bank collapse may also cause banks to scale back on commercial real-estate loans, making it harder for property owners to refinance existing debt. Investors demanded an average yield above U.S. Treasurys of 9.46 percent, an increase from 7.6 percent at the end of February. The average price of the bonds fell to about 75 cents on the dollar from roughly 89 cents a year ago.