What is already happening is some REITS are refusing to let their investors withdraw all or part of their money.
That is a waving red flag to any future investors.
It's easy to see what's happening here. Picture a hypothetical commercial property owned by a REIT. Suppose they acquired it five years ago for $100 million, and it was financed through a $75 million mortgage based on a maximum 75% loan-to-value ratio.
Now, suppose the initial five-year mortgage term is ending. The mortgage has a remaining balance of $70 million. Under normal circumstances they'd look to renew the mortgage for another five-year term for the full $70 million. However, the appraisal for the property indicates that it is now worth only $80 million. Based on a maximum loan-to-value ratio of 75%, a lender will only allow the REIT to borrow $60 million against the value of the property to renew the mortgage. The REIT has to come up with $10 million cash to pay the balance of the mortgage down to $60 million in order to renew it.
Now multiply this one scenario by thousands of commercial mortgage renewals across the U.S. The REITs aren't allowing the investors to withdraw their funds because they need a pile of cash on hand to pay down the mortgages just to renew them.