A lot of office buildings were financed when rates were low and occupancy was high. Now the loan is coming due, rates are higher, a tenant or two has left, and the bank's new numbers don't work.

You're not alone. The Mortgage Bankers Association reported in February 2026 that about $875 billion in commercial and multifamily mortgages, around 17% of all outstanding balances, is scheduled to mature in 2026. Office is one of the hardest property types to refinance in that wave.

Here in Louisville, CBRE's Q2 2026 numbers show overall office vacancy around 22%, with downtown Class A (the newest, best-located buildings) near 29% and suburban Class A closer to 20%. Rents have held up near record levels, but empty space doesn't pay a mortgage.

The worst thing you can do is wait until the maturity date to figure this out. Here's how owners in this spot usually work through it.

Step one: run the real numbers

Before you talk to the lender, know exactly where you stand:

• Your current NOI, or net operating income (rent minus operating expenses, before the mortgage)
• Your rent roll, with every lease's expiration date
• What a new loan would likely look like today: the amount a lender would offer is driven by your NOI and their required DSCR, or debt service coverage ratio (how many times your income covers the loan payment)
• What the building would sell for today, honestly

The gap between what you owe and what a new lender will give you is the problem you're solving. Everything below is a different way to close that gap.

Option 1: Ask for an extension or modification

Many lenders would rather extend a loan than take back an office building. Common outcomes:

• A short extension (often 6 to 24 months) to give you time to lease up or sell
• Interest-only payments for a period
• A paydown requirement, where you put in some cash in exchange for more time

Lenders respond better to owners who come early with a plan: a leasing strategy, a budget, and real numbers. Showing up the month before maturity with nothing makes everything harder.

Option 2: Bring in new money

If the building is good but the loan is too big, new equity can fill the gap:

• A partner who buys into the property
• Preferred equity, where an investor puts in money and gets paid back before you, at a higher return
• Mezzanine debt, a second layer of financing behind the main loan, usually at a higher rate

All of these cost you some upside, but they can save the property.

Option 3: A discounted payoff or note sale

Sometimes a lender will accept less than the full balance to close out the loan, especially if the alternative is a long foreclosure. This is called a discounted payoff. Other times, the lender sells the loan itself to an investor at a discount, and you end up negotiating with the new note holder.

These are complicated and usually involve attorneys on both sides. But they happen.

Option 4: Sell before it gets worse

If the numbers just don't work, selling while you still control the property is often the best financial move.

• You choose the timing and the buyer
• You avoid default interest, legal fees, and the damage a foreclosure does to your credit and your relationships with lenders
• A building that's still operating normally sells better than one in receivership (where a court-appointed manager takes over)

Who's buying office right now: value-add investors betting on a rebound, owner-users who want their own building (often with an SBA loan, a U.S. Small Business Administration program), medical users, and developers looking at conversions. Downtown Louisville has seen a wave of office buildings converted to hotels and apartments, including a 346,213-square-foot Class A tower taken off the office market for a hotel conversion in Q2 2026.

If the sale won't cover the full loan, a sale with lender approval for less than what's owed (a short sale) may still beat the alternatives.

Option 5: Hand it back

A deed in lieu of foreclosure means you transfer the building to the lender instead of going through foreclosure. It's faster and quieter, but you give up any remaining equity, and depending on your loan documents you may still be on the hook for some debts. Talk to an attorney before you even float the idea.

Questions to answer before maturity

• Is your loan recourse (you're personally on the hook) or non-recourse (the lender can generally only take the property)? It changes everything about your options.
• Are there "carve-outs" in your loan that could make a non-recourse loan personal?
• When do your biggest leases expire, and are those tenants staying?
• What would it cost to lease up the empty space: tenant improvements (building out space for a new tenant), leasing commissions, and free rent?

How we help

• An honest valuation, with what an investor, an owner-user, and a converter would each likely pay
• Leasing strategy for the empty space if keeping the building makes sense
• Quiet marketing to qualified buyers if selling makes sense, so tenants and the market don't panic
• Coordination with your lender, attorney, and CPA (Certified Public Accountant)

More context: Louisville office investment properties and our Louisville commercial real estate market report.

We're real estate agents, not attorneys or lenders, so this isn't legal or financial advice. Bring your attorney in early on anything involving default, receivership, or a deed in lieu.

Frequently asked questions

What happens if my office loan matures and I can't refinance?

The loan goes into maturity default. Lenders often negotiate an extension, modification, or sale first, but they can move toward foreclosure or receivership. Starting the conversation early gives you the most options.

Will my lender extend my commercial loan?

Many will, especially if you come early with a realistic plan and are willing to put in some cash or accept tighter terms. It's not guaranteed.

Can I sell an office building that's worth less than the loan?

Yes, with the lender's approval for a short payoff. It's often better than foreclosure for everyone involved.

Who is buying office buildings in Louisville right now?

Value-add investors, owner-users (including medical), and developers looking at conversions to hotels or apartments.

Let's run your numbers

Call or text Winner Commercial at (502) 305-8915, or send the details confidentially through our commercial inquiry form.