The Ministry of Finance has proposed a temporary capital requirement (risk weight floor) for commercial real estate (CRE) exposures in Norway, applicable to the largest banks. CRE is the sector where banks have historically incurred the largest losses during crises. Since CRE loan losses are low...

This paper is motivated by the observation that there are three types of CRE loans: loans on existing CRE properties; land and construction loans (also called land acquisition, development and construction loans (ADC loans)); and CRE loans in CMBS pools and insurance company portfolios. This...