Industrial, hospitality, retail, and self storage post $4.6 billion in new distress
The CRED iQ distress rate bottomed at 10.11% in April and rose for three consecutive months, reaching 10.78% in July. The special servicing rate followed the same pattern, climbing from 9.73% to 10.02% over that stretch, and the delinquency rate moved from 8.08% to 8.67%. Early August figures point to a fourth straight increase across all three measures, though the month is still being finalized.
Property Type Analysis
Industrial produced the single largest distressed loan in the entire report. Project JR, a warehouse and logistics property in Carrollton, Texas, hit its maturity date on August 9 and is now flagged Newly Delinquent (Performing Matured) — past its maturity but still making payments while a resolution is worked out. Across six pari passu notes (CONE 2024-DFW1), the loan totals $687.1 million. Industrial distress overall reached $1.41 billion across 101 severe alerts this month.
Hospitality distress centered on two large, name-brand assets. The Hyatt Regency New Orleans, a $325 million loan (NOHT 2019-HNLA), transferred to special servicing on a payment default — the largest new special servicer transfer of the month across any property type. The Ritz-Carlton Sarasota, a $362.5 million loan across four notes (BAMLL 2024-BHP), is now Newly Delinquent (Performing Matured) after missing its September maturity while continuing to pay. Hospitality distress overall reached $1.17 billion across 88 severe alerts this month.
Retail distress this month clustered in regional and outlet malls, coast to coast. Augusta Mall in Georgia, a combined $155.2 million across two notes, moved to Non-Performing Matured status on a balloon payment default. Fresno Fashion Fair Mall, $140 million combined across two notes, and Harlem USA in Manhattan, $108 million combined, both transferred to special servicing on imminent maturity default. Coral Ridge Mall in Iowa ($61.7 million) and The Shoppes at South Bay in Torrance, California ($37 million) both went newly late. Grove City Premium Outlets in Pennsylvania and Gulfport Outlet Mall in Mississippi, tied to the same MSC 2015-UBS8 deal, added $64 million combined. Retail distress overall reached $951.4 million across 89 severe alerts this month.
Self storage distress traced almost entirely to two national portfolio operators. A Prime Storage portfolio securitized in BMARK 2023-V4, $57.9 million across 91 properties spanning New York, Florida, Georgia, North Carolina, Connecticut, Arizona, Rhode Island, and Virginia, registered as newly late in the same cycle. A separate U-Haul portfolio in CD 2017-CD6, $23.6 million across 39 properties in more than a dozen states, did the same. Together the two portfolios account for the bulk of self storage’s $124 million in distressed balance this month, in a property type generally treated as close to recession-resistant.
Market Context
A limited refinancing environment combined with elevated interest rates continues to push loans past maturity across property types, not only the office and multifamily loans that typically dominate distress coverage.
Source: CRED iQ Property Alerts, August 2026. “Distress” includes Newly Late, Newly Delinquent (all maturity statuses), Delinquency Degradation (all stages), and New Special Servicer Transfer alert categories; excludes New Watchlist Loan additions.
