Commercial real estate is entering a no-nonsense phase. In 2026, refinancing will favor borrowers who show durable cash flow, committed equity, and a business plan that stands up to scrutiny. Those who can’t may find capital out of reach.

A year of separation:

According to Trepp, 2026 should bring steady progress on loan workouts—but also continued strain. With a wave of maturities approaching, lenders are using stricter underwriting to decide which deals still qualify. The focus has shifted away from broad asset classes or headline markets and toward a simple question: can this asset perform under today’s rates?

The aftereffects of cheap money:

Many loans coming due were originated during the ultra-low-rate environment of 2021, built on optimistic rent growth and thin cushions. Those projections are now under pressure. Lenders are modeling flat—or even declining—rents and re-running DSCRs at current coupons. If the numbers don’t hold, the refinance conversation often ends there.

Equity matters more than ever:

Sponsor strength is becoming the key differentiator. Borrowers willing and able to inject new equity are moving to the front of the line. Banks, CMBS special servicers, and private lenders increasingly expect fresh capital for extensions, restructurings, or recapitalizations—sometimes as a precondition to staying in the deal.

Capex under the microscope:

For transitional office and value-add assets in particular, capital plans are under intense review. Lenders want to see funded improvements, realistic leasing timelines, and sufficient reserves. Capital is available—as evidenced by more than $30 billion of CRE CLO issuance in 2025—but it’s flowing only to deals with credible execution strategies.

Tighter terms across the board:

Bank lending is showing modest signs of life, though with firmer covenants and more lender protections. CMBS issuance is trending toward the $100-billion range, largely anchored by high-quality collateral. Private credit remains active in complex situations, but pricing is higher and control rights are clearly defined.

The bottom line:

Refinancing in 2026 won’t be won by waiting on rate cuts. It will be earned through strong fundamentals, committed equity, and a realistic path forward. Sponsors who can demonstrate resilience will get deals done—those who can’t risk being left behind.