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Special Report

Canada CRE Risk

March 2024

Commercial Real Estate Poses Small and
Manageable Risks to Canada’s Financial System

Commercial properties under heightened assessment. The recent crisis of New York Community Bank sparked a fresh round of debate over the health of U.S. regional banks. The institution incurred an unexpected quarterly loss largely due to its exposure to rent-regulated, multifamily properties, which led to a 70 per cent reduction in its dividend in January. In response, the bank has reportedly closed a $1 billion capital infusion deal alongside a change in its board members. While the combination of circumstances troubling NYCB is particular to that institution, its troubles have nevertheless raised concerns regarding commercial real estate loan performance both in the U.S. and to the north. Due to differences in regulations and lending practices between the two countries, however, the risks exposed by the NYCB crisis are largely mitigated in Canada.
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