The overall CRED iQ distress was flat to our September 5th print at 9.1% remaining at a record high. CRED iQ’s special servicing rate increased to 8.4% from 8.0% last month, while the CRED iQ delinquency rate, consistent with the distress rate, came in flat at 6.8%. Most noteworthy change was the Office Distress reaching its new peak at 14.8%, a 156% increase from 18 months ago when distress rates were only 5.8%.
The CRED iQ team evaluated payment statuses reported for each loan (securitized by CMBS financing), along with special servicing status as part of our monthly distress update.
Segment Review
Multifamily slowed its distress rate growth, increasing to 11.2% from 11.0% in this print. Nine months ago, that rate was 2.6%. The multifamily segment loses its second-place status to retail, but the differences remain fractional. These figures include all multifamily securitized with CMBS financing.
The office segment rose by 108 basis points month-over-month, which earns office the second largest change this print and widens the office segment lead amongst all property types.
After reducing their distress rate last month, retail added 98 basis points. At 11.4%, retail has the second highest overall distress rate amongst all property types.
The hotel segment was up marginally, logging 8.6% of their properties in distress
As reported in our September 5th report, the industrial segment returned to its normal, sub 1% distress rate (0.6%) after resolving payment status issues associated with one large SBLL portfolio valued at $2.18 billion).
Meanwhile, self-storage saw a similar swing to 2.4% from 0.1% in our previous report. Increased distress in this sector is caused by a $356.5 million SBLL loan falling delinquent. More details are included in the Loan Highlight section.
Payment Status
Looking at distressed loan payment status, 18% of the loans are current. While 1.1% of loans are attributable to late (but in the grace period) and 6.5% of loans were late (but less than 30 days DQ). Combining these three metrics 25.6% of all loans were current / late within the grace period / less than 30 days delinquent.
Non-Performing Matured increased from 30.9% to 42.3%, 90+ Days Delinquent increased from 10.9% to 12.8%. Performing Matured decreased from 16.2% in our September report to 14.5% in this print .
Analysis Methodology
CRED iQ’s distress rate aggregates the two indicators of distress – delinquency rate and specially serviced rate – yielding the distress rate. The index includes any loan with a payment status of 30+ days delinquent or worse, any loan actively with the special servicer, and includes non-performing and performing loans that have failed to pay off at maturity.
It’s important to note that CRED iQ’s distress rate factors in all CMBS properties that are securitized in conduits and single-borrower large loan deal types. CRED iQ tracks Freddie Mac, Fannie Mae, Ginnie Mae, and CRE CLO loan metrics in separate analyses.
Loan Highlights
Office Loan
The $525.0 million loan backed by the Mobil Building, a 1.7 million SF mixed-use property failed to payoff at maturity in September 2024. The interest-only loan includes a $175.0 million mezzanine loan, representing a total debt of $700.0 million. The loan transferred to the special servicer due to maturity default. Servicer commentary indicates discussions of loan extension are being discussed.
The collateral consists of office and retail space located on East 42nd Street in the Grand Central submarket. Built in 1954, the property was valued at $900.0 million ($527/SF) at underwriting in June 2014. The property was 89.2% occupied and most recently had a DSCR of 1.39.
Self Storage Loan
A $356.5 million SBLL loan, backed by a portfolio of 29 self storage properties fell delinquent this month as it failed to pay off at its September 2024 maturity date. The portfolio consists of an aggregate of 24,076 units or 2.2 million SF across 12 states. The collateral was valued at $541.7 million ($22,498/unit) at contribution in April 2022. The portfolio had a DSCR of 0.98 and was 92.1% occupied.
The interest-only loan was added to the servicer’s watchlist in February 2024 due to delinquent taxes. The September 2024 servicer commentary indicates the borrower is seeking a short-term extension through mid-October to avoid purchasing another cap rate.
About CRED iQ
CRED iQ is a market data provider that offers a robust suite of data and software solutions tailored for commercial real estate and finance professionals.
With over $2.3 trillion of CRE loans, CRED iQ delivers instant access to a comprehensive range of financial data and analytics for millions of properties in every market. CRED iQ’s data and analytical capabilities are instrumental in helping investors, lenders and brokers make informed and strategic decisions critical to their business.
