“What we find most effective is when the borrower communicates with the servicer before the event of default, in writing.”
– Michael Cohen, Brighton Capital Advisors
CMBS Distress Is Rising: Why Early Borrower Action Matters as Office Struggles and Class B Stabilizes
CMBS distress is getting louder, and the knock-on effects are showing up where it counts: more loans moving toward special servicing, tighter refinancing math at maturity, and a market that still has not fully agreed on pricing. In a recent interview with Asset Securitization Report, Michael Cohen, Managing Partner at Brighton Capital Advisors, shared a clear, borrower-first view of what is driving the cycle and what tends to separate workable outcomes from expensive dead ends.
Cohen’s point is not theoretical. In CMBS, the moment a loan becomes a workout, the process changes. It gets more formal. It gets more structured. And it often gets more expensive. That is why he keeps coming back to timing and communication. The earlier a borrower engages, the more room there is to shape the path forward.
A big part of his message is that special servicing is not just a line item on a market chart. It is a different operating environment. Once a loan is transferred, you are no longer dealing with a simple lender-borrower relationship. There are servicers, trust rules, and investors whose incentives are not always aligned. The longer a borrower waits, the more the process can harden, and the more difficult it becomes to keep control of the narrative.
Cohen also zeroes in on where pressure is most pronounced right now. In his view, office and multifamily are leading the maturity default risk conversation. Office is still facing lender fatigue and tougher underwriting, which makes refinancing gaps harder to bridge. Multifamily is more nuanced, but Cohen flags risk in lower-quality product, particularly where the market is no longer supporting the capital stack assumptions that were common in late-2010s and 2020 vintages. In certain cases, the issue is not just rate shock. It is the possibility that there is not a realistic bid that solves the structure at all.
At the same time, Cohen does not frame the market as uniformly collapsing. He describes a more mixed landscape, with stabilization showing up in places, but liquidity remaining thin. That matters because thin liquidity slows price discovery. When assets do not trade, valuations become more negotiable, which can leave borrowers and lenders arguing from different versions of reality. It also means that “stability” can be misleading. Sometimes it is genuine resilience. Sometimes it is owners choosing not to sell because they do not like the number.
One of the more practical insights from Cohen’s interview is how he describes what actually works when a borrower needs a modification. His emphasis is on a written, organized package that explains the problem, lays out a plan, and supports that plan with credible economics. Not a vague request for relief. Not a last-minute phone call. A real memo that gives the parties in the CMBS chain something concrete to evaluate and respond to. In his experience, borrowers who do this before a default event give themselves a better shot at steering the outcome.
That focus on preparation also connects to how CMBS decisions get made. Cohen points out that borrowers should assume multiple audiences, not one lender. In many cases, the controlling class holder plays a key role, and incentives can change as values move and positions shift. Borrowers who understand that dynamic, and who communicate with that reality in mind, tend to avoid some of the avoidable friction.
