(Bloomberg) -- More US banks will fail as the commercial real estate crash begins to work its way through to lenders’ balance sheets, according to Joshua Pack, co-chief executive officer at Fortress Investment Group LLC.

Fortress has already acquired about $1.5 billion of performing office loans from financial institutions at prices ranging from 50 cents to 69 cents on the dollar, he said in an interview with Bloomberg’s Credit Edge podcast. Lenders are selling at those levels because they fear values have further to fall and want to take the hit now, he said, adding that regulators will merge some banks as they look for solutions to the problem.

Though the stress is not systemic, “you’re going to see more of this consolidation and/or liquidation of US banks,” Pack said. “A lot more eggs are going to get broken.”

More than $900 billion of debt on US commercial and multifamily real estate will require refinancing or property sales this year as building values fall and credit costs remain much higher than they were when the loans were taken out, according to the Mortgage Bankers Association. Smaller banks are particularly vulnerable after they increased their CRE lending during the pandemic, boosting their market share, and leaving themselves vulnerable to soaring interest rates.

The problems won’t be confined to the banks, Pack forecasts. About a trillion dollars of commercial mortgage-backed security loans come due by 2025, he said, half of which are estimated to be troubled. Debt levels that stood at 80% of a property’s value last year may now be at 100% or more because of value declines, he said.

“CMBS prices have been kind of bid up,” Pack said. When lenders and investors “start seeing those higher quality properties get into trouble and they start seeing sponsors hand back the keys on them, that’s when I think you’ll see a real kind of shift in how people are underwriting and approaching the CMBS market.”

The Fortress executive sees a trillion dollar opportunity emerging in the coming years for investors in troubled assets. New capital will be deployed by those firms to work out problem loans and properties after banks have written down and sold their exposure.

Fortress has bid for some of failed bank assets offered for sale through the Federal Deposit Insurance Corp. Pack found “a lot of reticence” from bank watchdogs to sell to private capital. But given the scope of the problem, he says the FDIC will have to be more open to non-bank buyers.

“The underlying stress here is just so big,” it’s “a multi trillion dollar problem,” he said. Regulators will “eventually get to a point where I think they’re just going to have to utilize private capital to help clean up the mess and to help recapitalize the system.”

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