T
he Federal Reserve's recent interest rate cut has brought some relief to commercial real estate owners, but for others it may come too late. A subset of property owners who are heavily indebted or locked into floating-rate debt are still facing significant challenges, particularly as banks under regulatory pressure tighten their lending standards. This is evident in the case of developer Daniel Moceri, whose 20-story office tower in Downtown Chicago struggled after interest rates surged to 10 percent following the Covid-19 pandemic.

    For companies that took advantage of low interest rates early in the pandemic by locking into floating-rate debt, the subsequent rate hike has been disastrous. Ashford Hospitality Trust, a Dallas-based hotel owner, is one such example. When interest rates shot up, the value of its hotels plummeted below the total debt backing them, forcing the company to sell off many properties to pay off its debt.

    Similarly, Tides Equities, which bought dozens of multifamily buildings in the Sun Belt and took on floating-rate loans, has struggled to keep up with its debt obligations as interest rates soared and rent growth stalled. The company's widespread financial difficulties have made it hard to secure rescue capital, even after the Fed's rate cut. For many owners, the impact of the Fed's decision remains uncertain as loan maturities loom.