There’s a quiet storm building in commercial real estate right now—one that most investors and media aren’t discussing. It’s not a flashy headline. It’s not a sudden collapse. But it’s serious, and it’s already well underway.
It’s called “extend and pretend.” And it might be the most critical trend shaping real estate in 2025.
Over the past few years, as property values dropped and loan maturities approached, many banks and lenders quietly started extending the terms on troubled commercial loans, hoping things would improve with time. They didn’t want to foreclose, revalue assets, or take write-downs on their books. So instead, they chose to extend the loan… and pretend the problem didn’t exist.
With a wall of debt maturing in 2025 and 2026, that strategy is reaching its limit.
What “Extend and Pretend” Really Means
Unlike traditional 15- or 30-year residential mortgages, most commercial real estate loans are short-term, typically five, seven, or ten years. When those loans mature, borrowers need to either refinance or sell. But what happens when a property’s value is below the loan balance?
That’s where things get tricky.
For lenders, forcing a foreclosure often means taking back an underperforming asset and realizing an immediate loss. They’d much rather keep the loan on the books and let the borrower keep paying—even if the value isn’t there. That’s where “extend and pretend” comes in. The bank extends the maturity date and avoids dealing with the asset’s real value.
But that delay doesn’t fix the fundamentals.
Why 2025 Is the Tipping Point
According to market data, 2025 is shaping up to be a peak year for commercial loan maturities, with over $5 billion set to come due by October. The pressure on lenders will increase dramatically as more of these loans hit their maturity dates, especially for underperforming asset classes like office buildings and overleveraged multifamily properties.
Banks already know these deals are underwater. They know many of the borrowers can’t refinance without bringing significant new capital, and they know that selling these assets today would mean locking in a loss.
But they also know they can’t keep kicking the can down the road forever.
Eventually, they’ll be forced to reconcile the values. And when that happens, we’ll see a flood of distressed properties enter the market not necessarily through public listings, but through private sales, loan workouts, and off-market opportunities.
What’s Really Happening Behind the Scenes?
At MC Companies, we’re already seeing it. Attorneys are sending us spreadsheets with deals their clients are trying to offload before default. Lenders quietly shop for troubled assets for investors who know how to operate. We’re underwriting properties where the loan amount exceeds the current market value, and where the current owners are walking away because the numbers no longer make sense.
In many cases, the original borrowers are just trying to find someone to take the loan off their hands. But the value isn’t there. The rents are flat, operating expenses are up, and interest payments have crushed cash flow.
These aren’t all bad properties. Some are in great locations with potential, just poorly managed or poorly financed. That’s where we step in. If we can buy the deal at the right price and have the team to turn it around, we can create long-term value for our investors.
What Investors Should Watch For
Not all of this will appear in the headlines. The real movement is happening in private, between lenders, lawyers, and experienced operators.
For investors looking to capitalize on this silent crisis, there are a few key signals to watch:
Loan maturities in your market, especially in multifamily and commercial real estate.
Bank-owned assets or properties are quietly being marketed off-market.
Declining occupancy in otherwise promising buildings.
Properties where operating expenses have outpaced rent growth.
Perhaps most importantly, there is the presence of motivated sellers who are underwater and just looking for a way out.
Final Thoughts: Crisis Creates Opportunity
I’ve said it many times—distress is where the opportunity lives. And what we’re seeing now in commercial real estate is a slow-moving but very real correction. The extend-and-pretend strategy might have bought some owners time. But time is running out.
If you’re paying attention to debt maturities, property performance, and lender behavior, the next 12 to 18 months could be a once-in-a-decade opportunity to buy well.
You don’t need to chase every deal. But if you understand underwriting, know your market, and have access to capital, this cycle could be where your best investments are made.
We’re not just talking about theory—we’re already in the market, reviewing deals, and acquiring properties where others are forced to exit. That’s how real wealth is built during uncertain times.
The crisis is real. The window is open. The only question is: will you be ready?
Whether it’s commercial real estate or multifamily housing. Prepare yourself for what’s ahead by arming yourself with a real estate education. Become a KenPro member to level up your investing game and stay ahead of the competition.
