Conflicting reports on the status of the commercial markets are what I have been reading. I'd be nervous for note holders of non owner occupied office space. Some point to gloom & doom, others point to bright spots.

Big huge deals, $1-5B and above, are usualy 5-7 year contracts with 0.25% of loan balance quarterly pay plus interest. The primary source of repayment is refinance at the end of the term. A lead bank will structure the deal, then farm it out to smaller entities in $1-2MM (M=1,000, MM=million) chunks. Some of these are marketed through the National Shared Credits (NSC) program. I've bought a number of these, and have subsequently sold all but 2. They were good performers 2 years ago. Not so much today. These are the "option arms" of the commercial world. Many companies are doing well enough. some are not.

Most commercial real estate loans in the $250M-10MM ranges are notes with defined loan terms of 10-15 years with amortizations as long as 30 years. I'm not so worried on these, as these loans are generally based on sound lending principals and a realistic repayment term. They don't rely on a refinance in 5-7 years to pay the note off, they rely on cash flow.

The NSC loans to companies that are maturing here shortly may have an issue getting refinance money, especially if the financials aren't so hot. This is where a portion of these commercial loan failures will come from. The shorter time horizons don't allow clients the ability to dig themselves out of a hole from poor financial performance towards the end of their loan term. Refinance risk is higher than the longer term amortizing loans. The NSC credits almost qualify as "evergreen" loans, where the balances never really decrease, and they may actually increase throughout time. I see a correlation between home owners who pull equity out of their homes constantly over time, and the NSC type credits.