When refinancing risk becomes management liability risk
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As refinancing pressure mounts, real estate investment managers face heightened scrutiny over how critical decisions are made
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With $875 billion of commercial and multifamily mortgage debt set to mature this year, representing a staggering 17 percent of the $5 trillion outstanding property debt, managers are feeling the pressure. In 2026, it’s no longer enough to just make the right decision concerning investments; managers have to be able to “show their work” and rationalize their process after the fact.
For Alex Ward, director of financial institutions at Intact Insurance Specialty Solutions, this heightened scrutiny is simply reflective of the current market stress.
“Real estate’s always been a really fascinating asset class because it’s influenced both by broad macroeconomic forces as well as highly localized property dynamics – and every cycle is somewhat different,” Ward tells IB.
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“The asset creates the stress, but management’s response creates the liability exposure”
Alex Ward,
Intact Insurance Specialty Solutions
Published Aug 10, 2026
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“The best defence is often just being able to answer a simple question… why was the decision made?”
Alex Ward,
Intact Insurance Specialty Solutions
“Today we’re seeing higher interest rates, refinancing pressure, and shifting fundamentals across sectors like office, industrial, and multifamily, creating not only investment challenges but ultimately governance and management liability considerations. The story is still all about assets under pressure, but increasingly the liability story is how managers are actually responding to those pressures.”
‘This is not just a single-year issue; it’s a multi-year issue’ Considering we’re currently in the heart of the refinancing cycle, with many loans that were extended during 2023 and 2024 now approaching maturity alongside scheduled 2026 maturities, owners and managers are now being forced to recapitalize, restructure, or even sell their assets. According to data from the Mortgage Bankers Association, $875 billion of commercial and multifamily mortgage debt is scheduled to mature in 2026 – accounting for a staggering 17 percent of total outstanding commercial real estate loans.
“That’s a big number,” adds Ward. “And this is not just a single-year issue; it’s a multi-year issue. A lot of observers in the marketplace think that today’s environment is a prolonged refinancing cycle rather than a single maturity cliff, which means there’s a lot of difficult decisions around valuations, liquidity, refinancing, and investor communications that’re going to go beyond 2027.”
For Ward, this moves the question from “Did the asset perform?” to also include “Did management act prudently to fulfil their fiduciary obligations and communicate properly?” And that’s putting investment managers under much more scrutiny than in previous years.
“Investors, lenders, regulators, and other stakeholders are also paying closer attention to how the decisions are being made and not just looking at the end result,” Ward tells IB. “They’re examining decision-making processes, risk disclosures, governance practices, and even fiduciary duty.”
Amid this swirling storm of refinancing pressures and valuation uncertainty, there’s a worrying gap emerging – management liability exposure.
Historically, investors could refinance property and then move on – especially given the super-low interest rates triggered by the COVID pandemic. Now, however, with rising rates and tougher loan-to-value ratios, managers must be careful when they decide how, where, and when to invest.
“They’re asking themselves, do we inject additional equity? Do we extend these funds? Should we pursue rescue capital in certain situations, or do we just maybe sell at a discount?” adds Ward. “All these decisions are critical, and they can create exposure to allegations of breaches of fiduciary duty because there are a lot of different stakeholders that each have competing interests.”
On top of this, valuation uncertainty is a growing risk area in 2026. As Ward tells IB, there’s reduced transaction activity right now, meaning managers have to rely more heavily on assumptions and professional judgement.
Ward says that in 2026 he’s seen increased exposure from allegations involving inadequate disclosure, valuation practices, liquidity constraints, fund performance, and portfolio strategy decisions.
“Fiduciary duty, conflict of interest, and professional negligence allegations can arise when investors believe management failed to act in their best interests,” adds Ward.
“It’s important to understand that poor performance alone rarely creates a claim. The asset creates the stress, but
management’s response creates the liability exposure. [As such], claims typically arise when investors believe management’s response to deteriorating conditions was unreasonable, insufficiently disclosed, conflicted, or even inconsistent with its obligations.”
It’s like walking a tightrope. Investment managers want to capitalize on the current market, but they must prove the logic behind their choices – even post-transaction.
With that in mind, the question moves to whether current management liability and E&O insurance programs are keeping pace with these evolving risks – or falling woefully behind.
According to Ward, while most of the programs seem relatively robust, organizations need to keep their eye on the ball.
“Businesses should regularly reassess whether coverage reflects today’s operating environment and increasingly complex claims scenarios,” he tells IB. “Particular attention should be paid to E&O and fund-level liability coverages, as well as how those policies interact with D&O protections across the management company, funds, SPEs, and joint ventures.
The key question is whether the program is structured to avoid coverage gaps when claims involve overlapping governance, management, and professional services allegations. The good news here, according to Ward, is that the insurance market has strong solutions available for these evolving risks. The challenge is that real estate organizations are often very complex and very few risks look exactly alike, meaning coverage needs vary significantly based on their strategy, the fund structure, the investor base, and the operational model.
‘Why was the decision made?’ “That’s why working with a broker that has deep expertise in both real estate and management liability is key for firms with complex organizational structures. There’s a true need for them to have a very thoughtful, dedicated program that avoids any gaps and unintended overlaps.”
Looking ahead to the future, there are several steps that real estate investment managers can take now to really strengthen governance, improve risk management, and
even better protect themselves against management liability exposure. And that begins with being accountable.
“The best defence is often just being able to answer a simple question,” adds Ward. “Why was the decision made?
$875B
of commercial and multifamily mortgage debt is scheduled to mature in 2026
That’s 17% of total outstanding commercial real estate loans
Massive mortgage debts maturing
Source: Mortgage Bankers Association
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Source: Insurance Specialty Solutions
‘Show me the process, not the result’ “And that can be tricky. Because investors may later challenge those assumptions if they believe the valuations were overstated or write-downs were delayed. [Essentially], the issue is not that the managers are exercising judgement as much as they’re expected to. The real issue is whether investors later believe that the judgement was reasonable and appropriately disclosed.”
A manager’s best defence here is documentation, especially with investors now demanding to be shown the process, not the result. In the current market, there are also certain types of management and professional liability claims emerging, highlighting where investment managers are still the most vulnerable.
“If a manager can clearly demonstrate the assumptions considered, alternatives evaluated, expert advice obtained, and communication provided to investors, then they’re going to be in a much stronger position – from both a governance and liability perspective. [As such], they need to focus on strengthening governance, maintaining clear documentation of significant decisions, and ensuring robust oversight around valuations, liquidity management, and refinancing strategies.
“Additionally, it’s important to communicate proactively with investors, manage expectations through transparency, conduct regular risk
assessments and scenario planning. Because that really goes such a long way. Remember, from a management liability and insurance standpoint, make sure that it all aligns with their specific organization’s risk profile.”
At the end of the day, the biggest management liability challenge for real estate investment managers in 2026 isn’t just that the assets are under pressure; it’s that every major decision surrounding the properties – from valuations to refinancing to liquidity management and communications – is being examined through a governance, fiduciary duty, and professional liability lens.
“Remember to keep that in mind, and it will serve you well this year,” warns Ward.