As companies reduce their office footprint, what institutions hold many commercial real estate loans?

US banks hold about $2.7 trillion in commercial real estate loans. The majority of that, about 80%, according to Goldman Sachs economists, is held by smaller, regional banks — the ones that the US government hasn’t classified as “too big to fail.”

Much of that debt is about to mature, and, in a troubled market, regional banks might have problems collecting on those loans. More than $2.2 trillion will come due between now and the end of 2027, according to data firm Trepp.

Fears were exacerbated last week when New York Community Bancorp (NYCB) reported a surprise loss of $252 million last quarter compared to a $172 million profit in the fourth quarter of 2022. The company also reported $552 million in loan losses, a significant increase from $62 million the prior quarter. The increase was driven partly by expected losses on commercial real estate loans, it said.

Because I know little about this, this leads to several questions:

If patterns from earlier crises hold up, does this mean that when regional banks suffer difficulties they will be gobbled up by the larger banks?

What do regional banks have more of these loans – is this more of their specialty or they are more familiar with the local markets?

Who exactly decides which financial institutions are too big to fail and at what point might these regional banks qualify?

If these are the losses of just one regional bank, what might we expect throughout the entire US within the next few years?