Credit unions across the country are navigating a commercial real estate (CRE) environment defined by volatility, concentration risk and shifting property fundamentals. Commercial loans at credit unions increased by $19.6 billion to $188 billion in Q3 2025, now representing 7.8% of total credit union loans. At the same time, delinquency rates have risen 19 basis points year-over-year to 109 basis points. While growth in commercial lending reflects opportunity and diversification, it also increases exposure when markets soften.
Having worked alongside credit unions nationwide to service loans and manage portfolios, I've seen what separates successful recoveries from avoidable losses. Distressed commercial real estate does not have to become a crisis, but it does require discipline, documentation and decisive action. Here are six approaches we have identified that separate successful recoveries from increased losses.
1. Start With the Story Behind the Loan
Every troubled loan has a backstory, and it rarely begins with the first missed payment. Effective workout strategies start with a comprehensive review of the original credit approval, underwriting assumptions and sources-and-uses of funds. Compare what was promised with what has actually occurred. Was a cash-out used as intended? Were tenant improvements completed? Did guarantor liquidity deteriorate before performance declined? In many cases, identifying where the borrower diverged from the original plan provides critical leverage in negotiations and, if necessary, legal proceedings.
Read the entire article here: https://www.cutimes.com/2026/03/04/6-strategies-for-managing-distressed-commercial-real-estate/
Published in the Credit Union Times: March 04, 2026
