The Wall Street Journal is reporting that a certain type of real estate financing may be a harbinger of tough times for the commercial real estate market. 

They are known as mezzanine loans: "These loans took off in the decade following the 2008-09 financial crisis as regulators cracked down on big banks and they became more conservative lenders. Many property owners made up the financing shortfall by borrowing from smaller banks, or by taking out these second loans from debt funds and other nonbank lenders, often on top of bank mortgages.”

"That debt allowed investors to bid up prices while putting in little of their own money, inflating the commercial real-estate market leading up to 2022. Now, real-estate prices are falling and many of these loans are in default, the latest sign that regulators’ efforts to shore up big banks after the 2008-09 crisis have created new trouble spots in property finance.”

The article points to the Margaritaville resort in New York City’s Times Square as an example. 

“...developer Sharif El-Gamal took out a $57 million mezzanine loan against the building, on top of a $167 million mortgage, according to court records. In March of this year, El-Gamal defaulted on the loan. In an email to his lenders, he blamed higher interest rates, tight capital markets and the tower’s vacant retail space, among other challenges, according to court records.