S&P Global – Real Estate Industry Credit Outlook, 2025

The report by S&P Global "Real Estate Industry Credit Outlook, 2025" examines credit trends and economic factors impacting the U.S. real estate market. The outlook for U.S. REITs remains challenging, with a negative ratings bias on office REITs due to elevated leverage and below-average tenant retention. The operating metrics of office REITs are stabilizing, and access to capital has improved modestly. In 2024, downgrades in the sector were prevalent, mainly due to office REITs facing high borrowing costs and operational pressures. For 2025, slower-than-expected rate cuts may keep borrowing costs high, affecting acquisition appetites. While demand for retail, housing, and healthcare assets remains resilient, refinancing risks persist, particularly for speculative-grade issuers. Transaction volumes are expected to increase, aided by improved access to capital and potential further interest rate cuts. However, higher-than-expected inflation could delay the recovery of credit metrics.