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CMBS is cracking under the pressure of an unstable market.

Unresolved loans make up 75% of delinquent loans tied to CMBS, up from 42% three years ago, and $23B of these delinquent loans are at or near maturity. Many of these loans originated when interest rates were near zero, and they are coming due in a dramatically different economic reality. 

Despite this, CMBS issuance is skyrocketing and headed toward a record year. What does this mean for the debt market?

To find out, Bisnow Editor-in-Chief Mark Bonner sat down with Ethan Penner — pioneer of CMBS, CEO of Mosaic Real Estate Investors and chairman of Reven Office REIT. 

Penner, who is running to be California’s next governor, said he is “not a big fan of concealment of the truth, and that he believes there is currently concealment of the “massive, massive” losses happening in real estate.

“These are breathtaking losses, and I think that clearly the system hasn’t recognized that on any level and is afraid that there are existential issues for many investors and even companies were those losses to be realized,” Penner said. 

Speaking about his gubernatorial aspirations, Penner highlighted his status as a political “outsider” who plans to make major changes to how California is run. 

“I don’t know where the toilets are in the statehouse — that makes me an outsider,” he said. “But I do know that the systems are broken.”

Watch the full conversation with Penner below.