Signs of a long-predicted commercial real estate crisis are beginning to bubble up as Aozora Bank, the 16th largest bank in Japan, became the second bank in two days to warn of growing losses from their portfolios of American office buildings.

The Japanese bank posted a net loss for the year of 28 billion yen, around $191 billion, after predicting that the company would post a profit of some 24 billion yen. The stock price fell 20 percent on the news.

For Aozora, loans for American office buildings accounted for about 6.6 percent of its portfolio, or around $1.89 billion. The bank said that 21 loans in their portfolio, accounting for $719 million, were not performing. 

The problems at Aozora mirrored issues at New York Community Bancorp, which Wednesday cut its dividend as it’s been stockpiling cash to cover commercial real estate loans. The stock price dropped 38 percent on the day of the news.

The issues for both of these banks were precipitated by the escalating problems in the American commercial real estate market, an industry rocked by the Covid pandemic that has yet to recover. According to the real estate analytics firm Green Street, prices for American offices declined by 25 percent in the year ending in December.