More than 1,000 banks in the United States have commercial real estate exposure greater than 300 percent of tier 1 capital, said Brian Lancaster, managing director and head of MBS, CMBS and ABS strategies at Royal Bank of Scotland.

Tier 1 capital reflects a bank’s strength. The tier 1 capital ratio is the ratio of a bank’s core equity capital and disclosed reserves to its total risk-weighted assets, rated for credit risk–in this case, commercial real estate. As loan values deteriorate, banks need to hold higher amounts of capital in reserve.

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