December 2021 Delinquency Report

The CRED iQ overall delinquency rate declined this month and extended its streak of consecutive improvements to 17 months. The delinquency rate, equal to the percentage of all delinquent specially serviced loans and delinquent non-specially serviced loans, for CRED iQ’s sample universe of $500+ billion in CMBS conduit and single-asset single-borrower (SASB) loans was 4.62%, down from 4.70% last month. Conversely, CRED iQ’s special servicing rate, equal to the percentage of CMBS loans that have transferred to special servicing, increased month-over-month to 7.32% from 7.15% previously. The increase in the special servicing rate was the first in nearly 15 months and was mainly driven by the recent transfers of a $1.2 billion mortgage secured by the 245 Park Avenue office building in Manhattan, NY and a $280 million loan secured by the 175 West Jackson office property in Chicago, IL. Aggregating the two indicators of distress – delinquency rate and special servicing rate – into an overall distressed rate (DQ + SS%) equals 7.58% of CMBS loans that are specially serviced, delinquent, or a combination of both, which is an increase compared to 7.51% in the prior month.

By property type, individual delinquency rates for lodging and retail exhibited modest month-over-month improvements but still remain the two most distressed sectors. The delinquency rate for multifamily increased compared to last month but remains in line with its trailing 12-month average of 2.3%. The delinquency rate for office remained flat, but the special servicing rate for office collateral notably spiked. This month’s transfers of 245 Park Avenue and 175 West Jackson contributed in pushing the office special servicing rate to its highest level in a year to 3.26%. With the increase, the office special servicing rate surpassed multifamily to become third-highest among property types.

CRED iQ also monitors an overall distressed rate (DQ + SS%) by property type to account for loans that qualify for either delinquent or special servicing subsets. The overall distressed rates typically track slightly higher than special servicing rates as most delinquent loans are also with the special servicer. This month, overall distressed rates for lodging, retail and self-storage declined while office, multifamily, and industrial increased. The increase in the overall distressed rate for office to 3.48% was most noteworthy and was weighted by an increase in the office special servicing rate. Although 245 Park Avenue and 175 West Jackson transferred to special servicing, both loans remained current in payment. For additional information for these two loans including updated leasing information for 245 Park Avenue, click View Details below: