While real estate owners absorb rent caps through lower property valuations, regional banks face systemic credit risk as rent-regulated loans mature into higher interest rate environments. Statutory rent caps prevent income from keeping up with rising operational costs (insurance, taxes, utilities, and labor). Coupled with higher interest rates, property cash flows at times fail to cover debt payments— pushing DSCRs below 1.0x and creating severe refinancing gaps for regional lenders. Understanding these debt covenant pressures and restructuring mechanics is critical for lenders and credit investors.