Commercial Real Estate Price Discovery via Auctions

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June 23, 2023

Properties and mortgage notes securing nearly $600 million in outstanding CMBS debt were auctioned from January 2023 through mid-June 2023, based on CRED iQ’s observations of impending losses for investors. Sales through an auction can take a couple months to close; however, sale transactions can be delayed or even fail to close after a due diligence process. Additional complications include relatively tighter lending for the commercial real estate market compared to the prior year; although, many of the distressed auction sales can attract all-cash acquisition bids. Of the approximate 70 auctions observed thus far in the first half of 2023, only nine sales auctioned assets with CMBS debt totaling $40 million were closed as of the June 2023 reporting period.

CRED iQ monitored over 70 individual CMBS property and note sales through their respective auction processes during the first half of 2023 and were able to identify definitive final bids for approximately 57 of those properties. Of the 57 auctions with definitive bids, 25 involved distressed sales facilitated by a special servicer. Of the 25 specially serviced assets, there were 16 REO properties with titles that transferred to respective CMBS trusts prior to auction events. Special servicers are tasked with liquidating these properties, sometimes after a period of stabilization, for maximum proceeds on behalf of CMBS certificate holders.

Of the 16 REO properties that were auctioned, the average holding period between title acquisition and auction date was approximately 1.5 years. The shortest holding period was slightly over seven months, and the longest holding period was just under five years. The most protracted sale was a March 2023 auction of Square 95, a 155,309-SF big-box retail outparcel of the Potomac Mills Mall in Woodbridge, VA. The special servicer acquired title on behalf of the CMBS trust in June 2018. The high bid was approximately $15.2 million, equal to $98/SF, which was approximately 22% less than the property’s most recently reported appraisal value of $19.5 million. The property was sold to the municipality of Prince William County, which is also a tenant that was previously signed by the special servicer to backfill more than half of the property’s vacant space. Outstanding debt on the property was approximately $22 million.

By securitization vintage, auctions since the start of 2023 were most prevalent among 2017 vintage deals. Approximately 43% of observed auctions were from 2017 securitizations, many from a 138-property lodging portfolio that used the auction process to unencumber individual hotels from a single large-loan securitization. For this reason, hotels were the most common property type for CMBS auctions with more than 50 attempted sales between January 2023 and mid-June 2023. Retail properties also comprised a high quantity of auctions with eight attempted sales. By market, the auctioned assets were dispersed geographically. Houston and Chicago were notable MSAs with exposure to multiple auctions of CMBS properties.

CRED iQ observed insights into pricing discovery for properties that resulted from assets’ final bids. Of the auction results confirmed during the first half of 2023, there were 25 CMBS properties that reported appraisal dates as of 2021 or later. Excluding assets with pre-2021 appraisals, approximately 32% of the auctioned assets were observed to have received final bids that were higher than most recent appraisals.

When properties traded at a discount to the most recent appraisals, the average difference was approximately -33%. One of the most severe discounts from appraisal to final bid, equal to -49%, was the Crystal Mall in Waterford, CT. The 518,480-SF property had been REO since October 2022 and was sold for $9.25 million, equal to $18/SF. The final bid was approximately half of the property’s most recently reported appraisal value of $18 million and 94% lower than the mall’s appraisal from April 2012 when its $95 million mortgage was originated. The mall had approximately $81 million of outstanding debt as of June 2023.

In summary, the average difference between final bid prices and most recent appraisals was approximately +1%. Isolating for specially serviced assets resulted in an average difference of -12%. Lodging properties exhibited a +6% average variance between recent appraisals and final auction bids while retail properties fared worse with an -8% average difference between most recent appraisals and final bids. Multifamily properties had a -23% difference, but most of the properties had small outstanding debt balances, less than $2 million. Office properties had a +1% average variance between most recent appraisals and final bids.

About CRED iQ

CRED iQ is a commercial real estate data, analytics, and valuation platform providing actionable intelligence to CRE and capital markets investors. Subscribers use the platform to identify valuable leads for leasing, lending, refinancing, distressed debt, and acquisition opportunities.

The platform also offers a highly efficient valuation engine which can be leveraged across all property types and geographies. Our data platform is powered by over $2.0 trillion in transactions and data covering CRE, CMBS, CRE CLO, Single Asset Single Borrower (SASB), and all of GSE / Agency.

CRED-iQ-CRE-Price-Discovery-via-Auctions Download

Distressed Commercial Real Estate Loan Workouts and Payoffs – May 2023

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CRED iQ

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June 10, 2023

0

CMBS transactions incurred approximately $8 million in realized losses during May 2023 via the workouts of distressed assets. CRED iQ identified eight workouts classified as dispositions, liquidations, or discounted payoffs in May 2023. Of the eight workouts, five were resolved without a principal loss. Of the three workouts resulting in losses, severities for the month of May ranged from 57.5% to 131%, based on outstanding balances at disposition. Aggregate realized losses in May 2023 were a fraction of the total from April due to a lower volume of workouts and a smaller average outstanding loan balance at disposition. The aggregate realized loss total of $7.6 million was also significantly lower than the average aggregate monthly CMBS loss total for the trailing 12 months, which was equal to approximately $125.5 million.

By property type, lodging properties accounted for half of the eight distressed resolutions in May 2023. Three of the four lodging workouts incurred realized losses. All realized losses in May were sourced to workouts involving hotels. Each lodging workout took approximately three years to be resolved from initial transfers to special servicing. Resolution timing for these hotels aligned with adverse financial impacts from the onset of the pandemic in 2020 and the subsequent inability of hotel operations to recover in the proceeding years.

The largest individual realized loss was associated with a loan secured by the Courtyard by Marriott Memphis East Lenox, a 96-key limited-service hotel located 15 miles outside of downtown Memphis, TN. The loan had an outstanding balance of $5.6 million prior to disposition and the distressed workout resulted in a realized loss of $3.2 million, equal to a 57.5% severity.

The largest individual loss severity was associated with the Quality Inn & Suites – Greenfield, IN, a 177-key limited-service hotel. The hotel was part of a two-property portfolio that secured a mortgage with an origination amount of $9.5 million. The loan transferred to special servicing in July 2019 and one of the hotels, flagged as a Holiday Inn Express, was sold through receivership in March 2022. Proceeds from the sale were applied to the loan’s outstanding balance. The loan, with only the Quality Inn hotel as collateral, was resolved with a $2.0 million loss against a $1.5 million outstanding balance prior to disposition, equal to a 131% severity.

The largest workout by outstanding balance was a $22.5 million mortgage secured by Chase Corporate Center, a 211,257-SF multi-building office property located in Birmingham, AL. The loan defaulted at is February 2023 maturity date and subsequently transferred to the special servicer. While the loan was in special servicing, the borrower was able to negotiate a purchase and sale agreement that resulted in a payoff of the loan without a principal loss. This two-month resolution was the quickest of all of May’s workouts.

Excluding defeased loans, there was approximately $3.4 billion in securitized debt among CMBS conduit, and Single-Borrower Large-Loan securitizations that was paid off or liquidated in May 2023, which was in line with April’s totals. In May, 2% of the loan resolutions were categorized as dispositions, liquidations, or discounted payoffs. The percentage of distressed workouts was markedly lower in the prior month. Loan prepayment remained relatively low in volume in May 2023 — approximately 8% of the loans were paid off with prepayment penalties, which was in line with prior months.

Retail had the highest total of outstanding debt payoff by property type in May with approximately 28% of the total by balance. Multifamily and lodging had the next highest percentages of outstanding debt payoff with 20% of the total for each property type. The $173.3 million payoff of the 483,569-SF Legacy Place power center in Dedham, MA and the $160 million refinancing for 541,527 SF of the Cumberland Mall in Atlanta, GA were among the largest mortgages to pay off in May 2023.

About CRED iQ

CRED iQ is a commercial real estate data, analytics, and valuation platform providing actionable intelligence to CRE and capital markets investors. Subscribers use the platform to identify valuable leads for leasing, lending, refinancing, distressed debt, and acquisition opportunities.

The platform also offers a highly efficient valuation engine which can be leveraged across all property types and geographies. Our data platform is powered by over $2.0 trillion in transactions and data covering CRE, CMBS, CRE CLO, Single Asset Single Borrower (SASB), and all of GSE / Agency.

CRED-iQ-CMBS-May-2023-Distressed-Workouts-and-Payoffs Download

Commercial Real Estate Market Delinquency Tracker – May 2023

By

CRED iQ

-

June 7, 2023

0

CRED iQ monitors distressed rates and market performance for nearly 400 MSAs across the United States, covering over $900 billion in outstanding commercial real estate (CRE) debt. Distressed rates (DQ + SS%) include loans that are specially serviced, delinquent, or a combination of both. Distressed rates and month-over-month changes for data reported as of May 2023 are presented below for the 50 largest MSAs, broken out by property type for a granular view of distress by market-sector.

Of the 50 largest MSAs tracked by CRED iQ, many exhibited recoveries from April surges in distressed rates exhibited across the majority of tracked markets. There were 37 markets with declines in CRE distress, equal to 74% of the 50 largest MSAs. The average decline in distress was approximately 64 basis points. The recoveries were a welcome signal of alleviation; however, declines in May were not enough to outweigh the extensive increases in distressed rates experienced in April by most markets. Notable markets with the sharpest declines in CRE distress this month included Charlotte (-2.7%), Minneapolis (-2.3%), and Birmingham, AL (-2.0%). Despite improvement in May, Minneapolis retains its position among the worst performing of the Top 50 markets with an overall distressed rate of 22.9%.

The Kansas City (+3.6%), New Orleans (+1.7%), and Bridgeport, CT (+1.1%) markets were among those that exhibited the highest month-over-month increases in distressed rates during May 2023. The Kansas City MSA was particularly impacted by the office sector after one of the largest properties in the market, the Aspiria Office Campus, transferred to special servicing. The campus encompasses 3.7 million SF of office space located Overland Park, KS and secures a $232.5 million mortgage. The special servicing transfer is related to the loan’s impending August 2023 maturity date.

For a more granular analysis of the Top 50 markets, CRED iQ further delineated individual markets’ distressed rates by property type for a comprehensive view by market-sector. After reviewing month-over-month changes in distress, CRED iQ observed that office or mixed-use sectors accounted for nine of the 10 largest increases in distress by market-sector. In addition to the Kansas City-Office market-sector, the Hartford-Office and Cincinnati-Office market-sectors exhibited relatively large month-over-month increases in distress. In the Hartford MSA, a $51.4 million mortgage secured by Constitution Plaza transferred to special servicing after a maturity default. In the Cincinnati MSA, two loans totaling $58.6 million, secured by office properties totaling 610,000 SF (312 Elm Street and 312 Plum Street), transferred to special servicing following occupancy declines. Additionally, a $1.3 billion mortgage secured by a portfolio of office and mixed-use properties owned by Workspace Property Trust transferred to special servicing in April 2023 and adversely impacted distressed rates for several market-sectors. The 146-property portfolio securing the loan is geographically dispersed across five markets: Miami, Minneapolis, Philadelphia, Phoenix, and Tampa. High collateral concentrations in the Philadelphia and Tampa office and mixed-use market-sectors caused some of the highest individual increases in distress this month among the 50 largest MSAs.

Switching focus to positive developments, the Indianapolis-Hotel market-sector exhibited the greatest month-over-month improvement in CRE distress. The decline in the lodging distressed rate for the Indianapolis MSA was driven primary by the cure of a $49.2 million loan secured by the Conrad Indianapolis, a 247-room full-service hotel located along the circumference of Monument Circle in the Indianapolis CBD. The loan transferred to special servicing in April 2020, but returned to the master servicer as a corrected loan three years later after multiple forbearances.

As previously highlighted, the Minneapolis MSA has the highest overall distressed rate — equal to 22.9% — and has maintained this position for the trailing 12 months. Cleveland (10.3%), Milwaukee (10.1%), Chicago (10.0%), and Birmingham, AL (8.7%) comprise the remaining markets with the highest rates of distress. The Salt Lake City MSA (0.1%) has the lowest percentage of distress among the Top 50 MSAs. Last month, the San Jose market held position with the lowest percentage of distressed CRE loans; however, multiple San Jose office market loans became distressed in May.

View commercial real estate distressed rates broken out by market and property type below:

MSA – Property Type	DQ/SS (millions)	DQ/SS (%)	Monthly Change
Allentown-Bethlehem-Easton, PA-NJ MSA	$76.6	2.4%	-0.2%
Allentown – Hotel	$0.0	0.0%	-3.1%
Allentown – Industrial	$0.0	0.0%	0.0%
Allentown – Multifamily	$0.0	0.0%	0.0%
Allentown – Office	$57.7	18.5%	0.0%
Allentown – Other	$0.0	0.0%	0.0%
Allentown – Retail	$18.8	5.1%	-0.1%
Allentown – Self Storage	$0.0	0.0%	0.0%
Atlanta-Sandy Springs-Marietta, GA MSA	$567.0	2.1%	-0.8%
Atlanta – Hotel	$80.8	3.2%	-0.4%
Atlanta – Industrial	$0.0	0.0%	0.0%
Atlanta – Multifamily	$4.5	0.0%	0.0%
Atlanta – Office	$431.7	19.1%	-1.3%
Atlanta – Other	$0.0	0.0%	0.0%
Atlanta – Retail	$50.0	2.7%	-4.4%
Atlanta – Self Storage	$0.0	0.0%	0.0%
Austin-Round Rock, TX MSA	$89.8	1.0%	-0.6%
Austin – Hotel	$51.8	6.4%	-1.5%
Austin – Industrial	$0.0	0.0%	0.0%
Austin – Multifamily	$0.0	0.0%	0.0%
Austin – Office	$0.0	0.0%	0.0%
Austin – Other	$4.1	1.3%	-0.6%
Austin – Retail	$33.9	4.5%	-1.9%
Austin – Self Storage	$0.0	0.0%	0.0%
Baltimore-Towson, MD MSA	$394.2	4.1%	-0.8%
Baltimore – Hotel	$65.4	14.1%	-0.2%
Baltimore – Industrial	$0.0	0.0%	0.0%
Baltimore – Multifamily	$5.1	0.1%	0.0%
Baltimore – Office	$65.6	7.6%	0.2%
Baltimore – Other	$11.4	5.5%	-1.2%
Baltimore – Retail	$246.7	23.3%	0.2%
Baltimore – Self Storage	$0.0	0.0%	0.0%
Birmingham-Hoover, AL MSA	$268.1	8.7%	-2.0%
Birmingham – Hotel	$10.3	7.6%	0.0%
Birmingham – Industrial	$0.0	0.0%	0.0%
Birmingham – Multifamily	$0.0	0.0%	0.0%
Birmingham – Office	$93.6	19.7%	-3.7%
Birmingham – Other	$0.0	0.0%	0.0%
Birmingham – Retail	$164.2	23.0%	-0.3%
Birmingham – Self Storage	$0.0	0.0%	0.0%
Boston-Cambridge-Quincy, MA-NH MSA	$157.9	0.8%	-0.1%
Boston – Hotel	$19.3	1.2%	0.1%
Boston – Industrial	$0.0	0.0%	0.0%
Boston – Multifamily	$0.0	0.0%	0.0%
Boston – Office	$50.3	0.7%	0.0%
Boston – Other	$0.0	0.0%	0.0%
Boston – Retail	$88.4	5.6%	0.4%
Boston – Self Storage	$0.0	0.0%	0.0%
Bridgeport-Stamford-Norwalk, CT MSA	$197.3	4.7%	1.0%
Bridgeport – Hotel	$37.3	23.5%	-2.4%
Bridgeport – Industrial	$17.8	14.2%	-4.4%
Bridgeport – Multifamily	$0.0	0.0%	0.0%
Bridgeport – Office	$132.4	11.1%	5.0%
Bridgeport – Other	$9.8	3.4%	1.2%
Bridgeport – Retail	$0.0	0.0%	0.0%
Bridgeport – Self Storage	$0.0	0.0%	0.0%
Charlotte-Gastonia-Concord, NC-SC MSA	$507.3	6.6%	-2.6%
Charlotte – Hotel	$47.1	5.3%	0.8%
Charlotte – Industrial	$0.0	0.0%	0.0%
Charlotte – Multifamily	$0.0	0.0%	0.0%
Charlotte – Office	$276.5	31.0%	-5.6%
Charlotte – Other	$100.3	28.9%	-1.6%
Charlotte – Retail	$83.4	8.4%	0.2%
Charlotte – Self Storage	$0.0	0.0%	0.0%
Chicago-Naperville-Joliet, IL-IN-WI MSA	$2,890.5	10.0%	-0.8%
Chicago – Hotel	$738.8	40.2%	-1.7%
Chicago – Industrial	$8.6	0.2%	0.2%
Chicago – Multifamily	$82.8	0.9%	0.1%
Chicago – Office	$1,544.1	18.8%	-0.7%
Chicago – Other	$214.5	8.5%	-0.2%
Chicago – Retail	$301.8	9.7%	2.4%
Chicago – Self Storage	$0.0	0.0%	0.0%
Cincinnati-Middletown, OH-KY-IN MSA	$194.7	4.8%	1.0%
Cincinnati – Hotel	$86.3	30.9%	-0.5%
Cincinnati – Industrial	$0.0	0.0%	0.0%
Cincinnati – Multifamily	$0.0	0.0%	0.0%
Cincinnati – Office	$58.6	11.9%	11.9%
Cincinnati – Other	$6.8	2.7%	-0.4%
Cincinnati – Retail	$43.0	8.1%	0.6%
Cincinnati – Self Storage	$0.0	0.0%	0.0%
Cleveland-Elyria-Mentor, OH MSA	$436.8	10.3%	0.9%
Cleveland – Hotel	$84.3	48.7%	-1.5%
Cleveland – Industrial	$0.0	0.0%	0.0%
Cleveland – Multifamily	$0.0	0.0%	0.0%
Cleveland – Office	$164.2	18.1%	8.2%
Cleveland – Other	$180.7	45.4%	1.7%
Cleveland – Retail	$7.6	1.1%	0.0%
Cleveland – Self Storage	$0.0	0.0%	0.0%
Columbus, OH MSA	$195.2	3.1%	-0.3%
Columbus, OH – Hotel	$18.1	7.0%	0.0%
Columbus, OH – Industrial	$0.0	0.0%	0.0%
Columbus, OH – Multifamily	$5.7	0.1%	0.1%
Columbus, OH – Office	$57.2	8.5%	0.2%
Columbus, OH – Other	$0.0	0.0%	0.0%
Columbus, OH – Retail	$114.2	13.8%	0.6%
Columbus, OH – Self Storage	$0.0	0.0%	0.0%
Dallas-Fort Worth-Arlington, TX MSA	$315.2	0.9%	-0.2%
Dallas – Hotel	$118.5	3.4%	-0.2%
Dallas – Industrial	$0.0	0.0%	0.0%
Dallas – Multifamily	$3.6	0.0%	0.0%
Dallas – Office	$143.7	4.7%	0.2%
Dallas – Other	$10.2	0.5%	0.2%
Dallas – Retail	$39.3	2.1%	-0.1%
Dallas – Self Storage	$0.0	0.0%	0.0%
Denver-Aurora, CO MSA	$853.7	5.4%	-0.9%
Denver – Hotel	$17.2	2.0%	-0.1%
Denver – Industrial	$0.0	0.0%	0.0%
Denver – Multifamily	$0.0	0.0%	0.0%
Denver – Office	$696.4	32.6%	0.5%
Denver – Other	$93.9	9.9%	5.6%
Denver – Retail	$46.2	3.4%	0.2%
Denver – Self Storage	$0.0	0.0%	0.0%
Detroit-Warren-Livonia, MI MSA	$253.1	2.4%	-0.3%
Detroit – Hotel	$83.8	12.8%	0.1%
Detroit – Industrial	$18.8	2.9%	0.0%
Detroit – Multifamily	$1.2	0.0%	0.0%
Detroit – Office	$3.7	0.2%	-0.6%
Detroit – Other	$0.0	0.0%	0.0%
Detroit – Retail	$145.6	10.0%	0.3%
Detroit – Self Storage	$0.0	0.0%	0.0%
Hartford-West Hartford-East Hartford, CT MSA	$196.9	7.9%	0.6%
Hartford – Hotel	$0.0	0.0%	-3.5%
Hartford – Industrial	$0.0	0.0%	0.0%
Hartford – Multifamily	$0.0	0.0%	0.0%
Hartford – Office	$71.5	26.6%	17.8%
Hartford – Other	$0.0	0.0%	0.0%
Hartford – Retail	$125.4	38.7%	-4.5%
Hartford – Self Storage	$0.0	0.0%	0.0%
Houston-Sugar Land-Baytown, TX MSA	$1,086.4	4.2%	-1.6%
Houston – Hotel	$389.9	43.5%	-2.9%
Houston – Industrial	$32.7	3.5%	-1.8%
Houston – Multifamily	$27.9	0.2%	0.1%
Houston – Office	$505.0	14.4%	-3.6%
Houston – Other	$87.4	14.9%	-2.4%
Houston – Retail	$43.5	1.1%	0.6%
Houston – Self Storage	$0.0	0.0%	0.0%
Indianapolis-Carmel, IN MSA	$126.2	2.2%	-1.2%
Indianapolis – Hotel	$42.1	7.7%	-8.8%
Indianapolis – Industrial	$0.0	0.0%	0.0%
Indianapolis – Multifamily	$9.7	0.3%	0.3%
Indianapolis – Office	$59.7	9.6%	0.3%
Indianapolis – Other	$0.0	0.0%	0.0%
Indianapolis – Retail	$14.8	4.3%	0.5%
Indianapolis – Self Storage	$0.0	0.0%	0.0%
Jacksonville, FL MSA	$174.4	3.4%	-0.7%
Jacksonville – Hotel	$24.4	6.0%	-0.2%
Jacksonville – Industrial	$0.0	0.0%	0.0%
Jacksonville – Multifamily	$0.0	0.0%	0.0%
Jacksonville – Office	$38.1	6.9%	0.1%
Jacksonville – Other	$0.0	0.0%	0.0%
Jacksonville – Retail	$111.8	29.3%	3.9%
Jacksonville – Self Storage	$0.0	0.0%	0.0%
Kansas City, MO-KS MSA	$316.1	5.7%	3.6%
Kansas City – Hotel	$28.1	12.2%	-0.3%
Kansas City – Industrial	$0.0	0.0%	0.0%
Kansas City – Multifamily	$2.5	0.1%	0.0%
Kansas City – Office	$232.5	21.0%	21.0%
Kansas City – Other	$20.8	10.5%	-1.0%
Kansas City – Retail	$32.1	5.9%	-2.6%
Kansas City – Self Storage	$0.0	0.0%	0.0%
Las Vegas-Paradise, NV MSA	$602.7	2.6%	-0.1%
Las Vegas – Hotel	$30.3	0.3%	0.1%
Las Vegas – Industrial	$0.0	0.0%	0.0%
Las Vegas – Multifamily	$0.0	0.0%	0.0%
Las Vegas – Office	$0.0	0.0%	0.0%
Las Vegas – Other	$325.0	41.2%	1.9%
Las Vegas – Retail	$247.3	6.8%	1.0%
Las Vegas – Self Storage	$0.0	0.0%	0.0%
Los Angeles-Long Beach-Santa Ana, CA MSA	$2,256.1	4.2%	0.0%
Los Angeles – Hotel	$161.9	3.0%	-0.2%
Los Angeles – Industrial	$0.0	0.0%	0.0%
Los Angeles – Multifamily	$6.8	0.0%	0.0%
Los Angeles – Office	$1,124.5	9.1%	3.2%
Los Angeles – Other	$66.4	2.1%	-1.8%
Los Angeles – Retail	$896.6	14.7%	-0.9%
Los Angeles – Self Storage	$0.0	0.0%	-0.9%
Louisville/Jefferson County, KY-IN MSA	$22.0	0.7%	-0.4%
Louisville – Hotel	$0.0	0.0%	0.0%
Louisville – Industrial	$0.0	0.0%	0.0%
Louisville – Multifamily	$6.9	0.5%	0.5%
Louisville – Office	$0.0	0.0%	0.0%
Louisville – Other	$0.0	0.0%	0.0%
Louisville – Retail	$15.1	3.0%	-3.1%
Louisville – Self Storage	$0.0	0.0%	0.0%
Memphis, TN-AR-MS MSA	$91.3	3.8%	-0.1%
Memphis – Hotel	$22.5	10.5%	-2.3%
Memphis – Industrial	$0.0	0.0%	0.0%
Memphis – Multifamily	$0.0	0.0%	0.0%
Memphis – Office	$0.0	0.0%	0.0%
Memphis – Other	$5.3	14.7%	-3.3%
Memphis – Retail	$63.5	16.7%	4.4%
Memphis – Self Storage	$0.0	0.0%	0.0%
Miami-Fort Lauderdale-Pompano Beach, FL MSA	$350.5	1.4%	0.0%
Miami – Hotel	$59.7	1.1%	-0.2%
Miami – Industrial	$0.0	0.0%	0.0%
Miami – Multifamily	$0.0	0.0%	0.0%
Miami – Office	$44.6	1.7%	1.5%
Miami – Other	$0.0	0.0%	0.0%
Miami – Retail	$246.2	4.5%	0.0%
Miami – Self Storage	$0.0	0.0%	0.0%
Milwaukee-Waukesha-West Allis, WI MSA	$245.5	10.1%	-0.4%
Milwaukee – Hotel	$16.5	10.3%	-0.5%
Milwaukee – Industrial	$0.0	0.0%	0.0%
Milwaukee – Multifamily	$0.0	0.0%	0.0%
Milwaukee – Office	$123.9	22.7%	6.2%
Milwaukee – Other	$0.0	0.0%	0.0%
Milwaukee – Retail	$105.1	24.2%	0.5%
Milwaukee – Self Storage	$0.0	0.0%	0.0%
Minneapolis-St. Paul-Bloomington, MN-WI MSA	$511.9	7.4%	-2.3%
Minneapolis – Hotel	$258.8	46.0%	2.2%
Minneapolis – Industrial	$0.0	0.0%	0.0%
Minneapolis – Multifamily	$9.8	0.3%	-0.1%
Minneapolis – Office	$77.5	3.9%	-0.3%
Minneapolis – Other	$165.7	33.5%	0.5%
Minneapolis – Retail	$1,400.0	74.5%	0.7%
Minneapolis – Self Storage	$0.0	0.0%	0.0%
Nashville-Davidson-Murfreesboro-Franklin, TN MSA	$58.3	1.0%	-0.3%
Nashville – Hotel	$51.4	3.4%	-0.1%
Nashville – Industrial	$0.0	0.0%	0.0%
Nashville – Multifamily	$0.0	0.0%	0.0%
Nashville – Office	$0.0	0.0%	0.0%
Nashville – Other	$0.0	0.0%	0.0%
Nashville – Retail	$6.8	0.9%	-0.8%
Nashville – Self Storage	$0.0	0.0%	0.0%
New Orleans-Metairie-Kenner, LA MSA	$115.0	3.4%	1.7%
New Orleans – Hotel	$56.5	5.3%	5.3%
New Orleans – Industrial	$0.0	0.0%	0.0%
New Orleans – Multifamily	$11.3	1.3%	-0.1%
New Orleans – Office	$26.9	5.2%	0.3%
New Orleans – Other	$14.6	9.6%	-0.2%
New Orleans – Retail	$5.6	0.9%	0.2%
New Orleans – Self Storage	$0.0	0.0%	0.0%
New York-Northern New Jersey-Long Island, NY-NJ-PA MSA	$8,192.5	6.3%	0.2%
New York City – Hotel	$885.3	23.6%	-0.8%
New York City – Industrial	$120.1	2.9%	0.1%
New York City – Multifamily	$1,159.6	3.2%	-0.2%
New York City – Office	$1,607.3	3.4%	0.7%
New York City – Other	$1,797.2	8.1%	0.5%
New York City – Retail	$2,623.0	20.3%	1.0%
New York City – Self Storage	$0.0	0.0%	0.0%
Orlando-Kissimmee, FL MSA	$102.8	1.0%	-0.2%
Orlando – Hotel	$13.5	0.5%	0.0%
Orlando – Industrial	$0.0	0.0%	0.0%
Orlando – Multifamily	$0.0	0.0%	0.0%
Orlando – Office	$61.0	11.5%	0.5%
Orlando – Other	$0.0	0.0%	0.0%
Orlando – Retail	$28.3	3.2%	0.1%
Orlando – Self Storage	$0.0	0.0%	0.0%
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA	$1,067.3	5.2%	-0.8%
Philadelphia – Hotel	$117.1	13.7%	-4.0%
Philadelphia – Industrial	$10.3	0.3%	0.0%
Philadelphia – Multifamily	$54.9	0.6%	-0.9%
Philadelphia – Office	$441.5	11.1%	0.4%
Philadelphia – Other	$414.2	33.1%	3.6%
Philadelphia – Retail	$29.3	1.3%	-0.1%
Philadelphia – Self Storage	$0.0	0.0%	0.0%
Phoenix-Mesa-Scottsdale, AZ MSA	$257.7	1.3%	-0.2%
Phoenix – Hotel	$54.1	3.1%	-0.7%
Phoenix – Industrial	$0.0	0.0%	0.0%
Phoenix – Multifamily	$0.0	0.0%	0.0%
Phoenix – Office	$52.0	2.3%	0.2%
Phoenix – Other	$17.7	2.1%	1.2%
Phoenix – Retail	$133.8	6.2%	-1.7%
Phoenix – Self Storage	$0.0	0.0%	0.0%
Pittsburgh, PA MSA	$290.9	6.4%	0.3%
Pittsburgh – Hotel	$8.3	4.8%	-10.6%
Pittsburgh – Industrial	$0.0	0.0%	0.0%
Pittsburgh – Multifamily	$50.7	2.3%	2.2%
Pittsburgh – Office	$103.7	10.2%	0.3%
Pittsburgh – Other	$115.5	33.0%	3.0%
Pittsburgh – Retail	$12.7	2.6%	1.1%
Pittsburgh – Self Storage	$0.0	0.0%	0.0%
Portland-Vancouver-Beaverton, OR-WA MSA	$326.7	3.7%	-0.6%
Portland – Hotel	$295.8	33.3%	-0.2%
Portland – Industrial	$0.0	0.0%	0.0%
Portland – Multifamily	$0.0	0.0%	0.0%
Portland – Office	$31.0	6.5%	2.2%
Portland – Other	$0.0	0.0%	0.0%
Portland – Retail	$0.0	0.0%	0.0%
Portland – Self Storage	$0.0	0.0%	0.0%
Raleigh-Cary, NC MSA	$21.8	0.6%	-0.4%
Raleigh – Hotel	$15.3	6.0%	-0.4%
Raleigh – Industrial	$0.0	0.0%	0.0%
Raleigh – Multifamily	$0.0	0.0%	0.0%
Raleigh – Office	$0.0	0.0%	0.0%
Raleigh – Other	$6.6	3.6%	0.7%
Raleigh – Retail	$0.0	0.0%	-3.8%
Raleigh – Self Storage	$0.0	0.0%	0.0%
Richmond, VA MSA	$156.9	4.7%	-1.1%
Richmond – Hotel	$0.0	0.0%	0.0%
Richmond – Industrial	$0.0	0.0%	0.0%
Richmond – Multifamily	$0.0	0.0%	0.0%
Richmond – Office	$0.0	0.0%	0.0%
Richmond – Other	$12.8	8.8%	0.0%
Richmond – Retail	$144.1	31.6%	1.4%
Richmond – Self Storage	$0.0	0.0%	0.0%
Riverside-San Bernardino-Ontario, CA MSA	$284.0	2.4%	-0.4%
Riverside – Hotel	$29.6	6.3%	-2.6%
Riverside – Industrial	$0.0	0.0%	0.0%
Riverside – Multifamily	$1.4	0.0%	0.0%
Riverside – Office	$0.0	0.0%	0.0%
Riverside – Other	$0.0	0.0%	0.0%
Riverside – Retail	$253.0	12.6%	0.8%
Riverside – Self Storage	$0.0	0.0%	0.0%
Sacramento-Arden-Arcade-Roseville, CA MSA	$16.9	0.3%	-0.1%
Sacramento – Hotel	$0.0	0.0%	0.0%
Sacramento – Industrial	$0.0	0.0%	0.0%
Sacramento – Multifamily	$0.0	0.0%	0.0%
Sacramento – Office	$6.1	0.8%	0.0%
Sacramento – Other	$10.9	3.0%	-0.7%
Sacramento – Retail	$0.0	0.0%	0.0%
Sacramento – Self Storage	$0.0	0.0%	0.0%
Salt Lake City, UT MSA	$6.1	0.1%	-0.2%
Salt Lake City – Hotel	$6.1	1.9%	-0.2%
Salt Lake City – Industrial	$0.0	0.0%	0.0%
Salt Lake City – Multifamily	$0.0	0.0%	0.0%
Salt Lake City – Office	$0.0	0.0%	0.0%
Salt Lake City – Other	$0.0	0.0%	0.0%
Salt Lake City – Retail	$0.0	0.0%	-1.0%
Salt Lake City – Self Storage	$0.0	0.0%	0.0%
San Antonio, TX MSA	$186.9	2.9%	-1.1%
San Antonio – Hotel	$16.4	6.3%	-2.5%
San Antonio – Industrial	$0.0	0.0%	0.0%
San Antonio – Multifamily	$0.0	0.0%	0.0%
San Antonio – Office	$56.2	13.2%	0.0%
San Antonio – Other	$0.0	0.0%	0.0%
San Antonio – Retail	$114.3	14.8%	-0.5%
San Antonio – Self Storage	$0.0	0.0%	0.0%
San Diego-Carlsbad-San Marcos, CA MSA	$63.6	0.5%	-0.1%
San Diego – Hotel	$56.6	2.9%	-0.5%
San Diego – Industrial	$0.0	0.0%	0.0%
San Diego – Multifamily	$4.1	0.1%	0.0%
San Diego – Office	$0.0	0.0%	0.0%
San Diego – Other	$0.0	0.0%	0.0%
San Diego – Retail	$2.9	0.2%	0.0%
San Diego – Self Storage	$0.0	0.0%	0.0%
San Francisco-Oakland-Fremont, CA MSA	$1,296.9	4.9%	0.0%
San Francisco – Hotel	$209.4	7.1%	0.2%
San Francisco – Industrial	$0.0	0.0%	0.0%
San Francisco – Multifamily	$450.8	5.6%	-1.3%
San Francisco – Office	$437.7	4.4%	0.3%
San Francisco – Other	$143.3	4.5%	0.5%
San Francisco – Retail	$55.6	4.9%	0.8%
San Francisco – Self Storage	$0.0	0.0%	0.0%
San Jose-Sunnyvale-Santa Clara, CA MSA	$146.5	0.7%	0.4%
San Jose – Hotel	$35.1	0.5%	0.0%
San Jose – Industrial	$0.0	0.0%	0.0%
San Jose – Multifamily	$6.4	0.2%	0.2%
San Jose – Office	$105.0	1.3%	1.1%
San Jose – Other	$0.0	0.0%	0.0%
San Jose – Retail	$0.0	0.0%	0.0%
San Jose – Self Storage	$0.0	0.0%	0.0%
Seattle-Tacoma-Bellevue, WA MSA	$58.2	0.3%	-0.2%
Seattle – Hotel	$35.8	2.6%	-1.7%
Seattle – Industrial	$0.0	0.0%	0.0%
Seattle – Multifamily	$0.0	0.0%	0.0%
Seattle – Office	$0.0	0.0%	0.0%
Seattle – Other	$22.4	1.4%	-0.1%
Seattle – Retail	$0.0	0.0%	0.0%
Seattle – Self Storage	$0.0	0.0%	0.0%
St. Louis, MO-IL MSA	$219.5	5.3%	0.1%
St. Louis – Hotel	$1.7	0.5%	0.0%
St. Louis – Industrial	$0.0	0.0%	0.0%
St. Louis – Multifamily	$3.2	0.2%	-0.1%
St. Louis – Office	$16.7	3.8%	3.8%
St. Louis – Other	$13.9	2.9%	0.4%
St. Louis – Retail	$184.0	20.2%	0.9%
St. Louis – Self Storage	$0.0	0.0%	0.0%
Tampa-St. Petersburg-Clearwater, FL MSA	$159.2	1.5%	0.3%
Tampa – Hotel	$58.8	8.1%	-1.2%
Tampa – Industrial	$0.0	0.0%	0.0%
Tampa – Multifamily	$1.2	0.0%	0.0%
Tampa – Office	$36.7	4.8%	2.3%
Tampa – Other	$21.4	6.4%	6.4%
Tampa – Retail	$41.1	6.0%	2.1%
Tampa – Self Storage	$0.0	0.0%	0.0%
Tucson, AZ MSA	$156.1	4.6%	-0.6%
Tucson – Hotel	$0.0	0.0%	0.0%
Tucson – Industrial	$0.0	0.0%	0.0%
Tucson – Multifamily	$0.0	0.0%	0.0%
Tucson – Office	$0.0	0.0%	0.0%
Tucson – Other	$0.0	0.0%	0.0%
Tucson – Retail	$156.1	20.0%	0.2%
Tucson – Self Storage	$0.0	0.0%	0.0%
Virginia Beach-Norfolk-Newport News, VA-NC MSA	$182.8	3.8%	-0.8%
Virginia Beach – Hotel	$14.8	3.3%	-0.1%
Virginia Beach – Industrial	$0.0	0.0%	0.0%
Virginia Beach – Multifamily	$0.0	0.0%	0.0%
Virginia Beach – Office	$0.0	0.0%	0.0%
Virginia Beach – Other	$4.4	3.5%	0.4%
Virginia Beach – Retail	$163.6	18.5%	0.2%
Virginia Beach – Self Storage	$0.0	0.0%	0.0%
Washington-Arlington-Alexandria, DC-VA-MD-WV MSA	$1,082.2	3.4%	-0.1%
Washington, DC – Hotel	$40.6	3.7%	0.0%
Washington, DC – Industrial	$0.0	0.0%	0.0%
Washington, DC – Multifamily	$0.0	0.0%	0.0%
Washington, DC – Office	$790.8	10.5%	0.5%
Washington, DC – Other	$107.7	7.5%	4.7%
Washington, DC – Retail	$143.1	4.3%	0.4%
Washington, DC – Self Storage	$0.0	0.0%	0.0%
Grand Total	$27,825.9	3.8%	-0.5%

About CRED iQ

CRED iQ is a commercial real estate data, analytics, and valuation platform providing actionable intelligence to CRE and capital markets investors. Subscribers use the platform to identify valuable leads for leasing, lending, refinancing, distressed debt, and acquisition opportunities.

The platform also offers a highly efficient valuation engine which can be leveraged across all property types and geographies. Our data platform is powered by over $2.0 trillion in transactions and data covering CRE, CMBS, CRE CLO, Single Asset Single Borrower (SASB), and all of GSE / Agency.

CRED-iQ-Market-Delinquency-Tracker-May-2023 Download

May 2023 Delinquency Report

By

CRED iQ

-

June 1, 2023

0

*DQ = All delinquent CMBS loans in the conduit and SASB universe, including specially serviced and non-specially serviced loans*
*SS = All specially serviced CMBS loans in the conduit and SASB universe, including current, delinquent and REO*
*DQ + SS = All distressed CMBS loans in the conduit and SASB universe that are delinquent, specially serviced, or a combination of both*

The CRED iQ delinquency rate for CMBS for the month of May 2023 increased for the fourth consecutive month to 4.20%. The delinquency rate was 28 basis points higher than the prior month’s rate of 3.93%, equal to a 7% increase. Furthermore, the CRED iQ delinquency rate has risen by approximately 29% since the start of 2023 as a result of headwinds facing the commercial real estate industry. Main drivers include increased distress in the office sector and a tighter refinancing environment for loans coming due at maturity. The delinquency rate is equal to the percentage of all delinquent specially serviced loans and delinquent non-specially serviced loans, for CRED iQ’s sample universe of $600+ billion in CMBS conduit and single asset single-borrower (SASB) loans. CRED iQ’s special servicing rate, equal to the percentage of CMBS loans that are with the special servicer (delinquent and non-delinquent), increased month-over-month to 6.01%, from 5.39%. After a slight decline in April, the special servicing rate continued its upward trendline started in December 2022 when the rate equaled 4.62%. Aggregating the two indicators of distress – delinquency rate and special servicing rate – into an overall distressed rate (DQ + SS%) equals 6.43% of CMBS loans that are specially serviced, delinquent, or a combination of both. Last month’s distressed rate was equal to 6.08%, which was 35 basis points lower that the May 2023 distressed rate. The month-over-month increase in the overall distressed rate mirrors increases in the delinquency and special servicing rates. Distressed rates generally track slightly higher than special servicing rates as most delinquent loans are also with the special servicer.

May 2023 data revealed additional turmoil for the office sector for which the property-level delinquency rate rose to 3.98%, compared to 3.81% in April. One of the largest loans to be reported delinquent was a $783 million senior fixed-rate mortgage secured by 375 Park Avenue, a 38-story, 830,928-SF office tower located in Midtown Manhattan. The loan failed to pay off at its scheduled May 2023 maturity date and subsequently transferred to special servicing to execute a modification, which extended the loan’s maturity date one year, among other terms. Financing for the property included an additional $217 million in mezzanine debt that was also extended. A near-term delinquency cure is likely given the closing of the modification; however, the maturity default exemplifies the choppy waters facing impending office debt maturities.

Perhaps more concerning was the 30-day delinquency of a $275 million mortgage secured by EY Plaza, a 920,308-SF office tower in downtown Los Angeles. The loan transferred to special servicing in April 2023 due to the missed payment. Similar to 375 Park, EY Plaza has mezzanine financing ($30 million). However, a primary difference from a credit perspective is that EY Plaza is encumbered by floating-rate debt, which highlights issues with debt service coverage more so than refinance risk.

The delinquency rate for office properties has been the most volatile among property types. The lodging delinquency rate (4.55%) exhibited a modest month-over-month increase but is down year-over-year. The retail delinquency rate (7.59%) is higher than April’s rate but has exhibited signals of plateauing with recent workouts of loans secured by regional malls. The multifamily delinquency rate (1.87%) has exhibited year-over-year increases but remains relatively lower than other major property types. Industrial (0.34%) and self-storage (0.00%) continue to outperform from a delinquency perspective.

Pivoting to special servicing rates by property type, office loans exhibited the most activity. The special servicing rate for loans secured by office properties increased to 6.08%, compared to 5.57% as of April 2023. With its rate now above 6%, the office special servicing rate is nearly double its level from 12 months ago. This month’s surge in specially serviced office loans was driven by the transfer of a $1.3 billion loan secured by a 146-property office portfolio owned by Workspace Property Trust. The floating-rate loan transferred to special servicing in April 2023 ahead of its upcoming July 2023 maturity date. The loan has an extension option remaining but obtaining an interest rate cap may be cost prohibitive.

Aside from the office sector, the special servicing rate for retail loans declined to 9.95%, compared to 11.04% as of April 2023. The special servicing rate for lodging came in at 6.38%, a modest increase compared to April 2023. Multifamily (3.87%) exhibited a decrease in its special servicing rate and the special servicing rate for industrial properties (0.42%) was relatively flat compared to the prior month. There was no self-storage specially serviced inventory.

*DQ + SS = All distressed CMBS loans in the conduit and SASB universe that are delinquent, specially serviced, or a combination of both*

CRED iQ’s CMBS distressed rate (DQ + SS%) by property type accounts for loans that qualify for either delinquent or special servicing subsets. This month, the overall distressed rate for CMBS increased to 6.43%. The increase was 34 basis points higher than April’s distressed rate (6.08%), equal to a 5.7% increase. CRED iQ observed a relative surge in the overall distressed rate over the past four months as the distressed rate pushes to its highest level since early-2022.

For additional information about two of this month’s largest loans that transferred to special servicing, click View Details below:

	[View Details]	[View Details]
Loan	375 Park Avenue	EY Plaza
Balance	$783 million	$275 million
Special Servicer Transfer Date	4/13/2023	4/11/2023

About CRED iQ

CRED iQ is a commercial real estate data, analytics, and valuation platform providing actionable intelligence to CRE and capital markets investors. Subscribers use the platform to identify valuable leads for leasing, lending, refinancing, distressed debt, and acquisition opportunities.

The platform also offers a highly efficient valuation engine which can be leveraged across all property types and geographies. Our data platform is powered by over $2.0 trillion in transactions and data covering CRE, CMBS, CRE CLO, Single Asset Single Borrower (SASB), and all of GSE / Agency.

CRED-iQ-May-2023-Delinquency-Report Download

Office Lease Expirations – Looking Ahead 18 Months

By

CRED iQ

-

May 18, 2023

0

CRED iQ examined major lease expirations for CMBS office collateral for the near-term, 18-month horizon, as well as the next 10 years. Downsizing and non-renewal by office tenants is a contributing factor to headwinds facing the office sector, which has been plagued by employee-employer workplace dynamics and tenants’ need to shed space, reduce real estate costs, and right-size physical footprints during a period of economic uncertainty.

A high-level view of lease expirations provides a general sense, or foreboding in some instances, of the mechanics that the office sector needs to work through as the property type falls out of favor with lenders, investors, and other commercial real estate industry constituents. Lease expiration analysis also serves as a tool to evaluate when and where the next pockets of elevated office distress will materialize.

Office collateral has been a primary contributor to incremental distress in commercial real estate throughout 2023. CRED iQ’s distressed rate for CMBS office loans, which includes delinquent loans and specially serviced loans secured by office collateral, was 5.8% as of April 2023 and has increased for six consecutive months. Furthermore, the distressed rate for office collateral has more than doubled compared to 12 months prior and is at its highest level since CRED iQ started tracking such data in early 2020.

CRED iQ examined over 21,000 major leases for CMBS office and mixed-use collateral properties. For this exercise, major leases were defined as one of the five-largest leases by percentage of net rentable area (NRA) for a particular property. Additionally, office collateral securing CMBS does not represent the entire office market, but rather serves as proxy to identify challenges facing the larger universe of office properties.

Takeaways from our observations include over 500 million SF of NRA and 17,000+ leases scheduled to expire over the next 10 years for office properties secured by CMBS loans. There is nearly 53 million SF of space that has already expired in 2023 or is scheduled to expire during the remainder of 2023. Scheduled lease rollover is at its highest in 2024 and 2025 — each year will individually have more than 60 million SF rolling. The aggregate number of leases with expiration dates in 2024 and 2025 was more than 5,000. Scheduled lease expirations subsequently taper off in 2026 (53 million SF) and 2027 (50 million SF) before surging to 55 million SF in 2028. As a caveat to these figures, the underlying data by its nature is historical, imperfect, and may not reflect recent extensions that tenants may have signed.

Lease expiration figures were further parsed by geographic location to provide a granular view by MSA. A detailed view of lease expirations by individual office market helps identify which markets’ vacancy rates are at risk of being stressed. The data was parsed to isolate the second half of 2023 and the full year 2024. In both time frames, the New York MSA had the highest amount of space and the highest number of leases scheduled to expire. In total, the New York MSA had more than 14 million SF of leases scheduled to expire in the next 18 months — 4 million SF is scheduled to expire in the second half of 2023 and 10 million SF is scheduled to expire in 2024. In the second half of 2023, notable MSAs with elevated lease rollover included Washington, DC and Philadelphia with both markets ranking in the Top 5 for that category. The Washington, DC and Philadelphia markets both have distressed rates for office properties in excess of 10%. Looking forward to 2024, focus shifts to the Chicago and Atlanta MSAs. Chicago has 3 million SF of space expiring in 2023 with a most recent distressed rate of 19.5% for office collateral. Atlanta has 2.1 million SF of leases scheduled to expire in 2024 with a 20% distressed rate for office as of April 2023.

To be fair, many tenants will renew or even expand footprints in certain office buildings. However, rising vacancy rates — in excess of 20% and even stretching to 30% in certain markets — indicate a high level of risk that many tenants will downsize or fail to renew altogether. Lease expirations can have several possible outcomes for office landlords. From a positive perspective, a renewal or new direct lease may allow rents to reset higher if market conditions are favorable. However, high vacancies and downward pressures on rental rates may lead to reductions in cash flow and subsequent distressed scenarios.

About CRED iQ

CRED iQ is a commercial real estate data, analytics, and valuation platform providing actionable intelligence to CRE and capital markets investors. Subscribers use the platform to identify valuable leads for leasing, lending, refinancing, distressed debt, and acquisition opportunities.

The platform also offers a highly efficient valuation engine which can be leveraged across all property types and geographies. Our data platform is powered by over $2.0 trillion in transactions and data covering CRE, CMBS, CRE CLO, Single Asset Single Borrower (SASB), and all of GSE / Agency.

CRED-iQ-CMBS-April-2023-Distressed-Workouts-and-Payoffs-1 Download

CRED iQ Launches Real-Time Distress Alerts

By

CRED iQ

-

May 17, 2023

0

NEW YORK and PHILADELPHIA CRED iQ, the fastest growing provider of commercial real estate (CRE) data, analytics and valuation is pleased to announce the launch of a breakthrough real-time data feed which is ideally suited for the current CRE environment.

Introducing CRED iQ’s Daily Distress Alerts. As soon as any property, loan or portfolio hits key credit triggers that signal a potential or imminent default (such as a missed payment, increased number of days delinquent or transfer to the Special Servicer) a real-time alert, fully equipped with pertinent data is sent directly to CRED iQ subscribers via email.

Sign up for Daily Distress Alerts

“In today’s market, being among the first to be notified is a critical advantage” noted Michael Haas, Co-Founder and CEO of CRED iQ. “Our software sends these vital alerts to our subscribers in nearly real-time, while including invaluable data about the loan and the reasons for the potential default.”

CRED iQ reported nearly $4 billion in maturity defaults alone so far this year. Of the 50 largest MSAs tracked by CRED iQ, the overwhelming majority exhibited month-over-month increases from March to April in the percentage of distressed CRE loans. The distress trend is clearly accelerating.

“Our clients have expressed the critical importance of early notification of distress—both for tactical opportunities as well as the wider context and forecasting advantages” added Chris Aronson, Chief Commercial Officer of CRED iQ. “We listened carefully, and CRED iQ is now thrilled to deliver this exciting new capability.”

Daily Distressed Alerts are available to all subscribers as an add-on feature. It is also included in some of our Enterprise subscriptions.

About CRED iQ

CRED iQ is a commercial real estate data, analytics, and valuation platform providing actionable intelligence to CRE and capital markets investors. Subscribers use the platform to identify valuable leads for leasing, lending, refinancing, distressed debt, and acquisition opportunities.

Full Data Access to CRED iQ

Our data platform is powered by over $2.0 trillion in transactions and data covering CRE, CMBS, CRE CLO, Single Asset Single Borrower (SASB), and all of GSE / Agency.

If you would like to learn more about CRED iQ’s products and services, please contact team@cred-iq.com or (215) 220-6776. Visit us at cred-iq.com

Distressed Workouts and Payoffs – April 2023

By

CRED iQ

-

May 9, 2023

0

CMBS transactions incurred approximately $94 million in realized losses during April 2023 via the workouts of distressed assets. CRED iQ identified 15 workouts classified as dispositions, liquidations, or discounted payoffs in April 2023. Of the 15 workouts, four were resolved without a principal loss. Of the 11 workouts resulting in losses, severities for the month of April ranged from 1.5% to 71%, based on outstanding balances at disposition. Aggregate realized losses in April 2023 were more than 1.5x higher than March 2023 due, in part, to a higher volume of distressed workouts. The aggregate realized loss total of $94.2 million was lower than the average aggregate monthly CMBS loss total for the trailing 12 months, which was equal to approximately $124 million.

By property type, workouts were concentrated in lodging, accounting for eight of the 15 distressed resolutions in April 2023. Distressed workouts for lodging properties had the second-highest total of aggregate realized losses ($28 million) by property type, which accounted for 30% of the total for the month. The largest distressed workout featuring a lodging property was the discounted payoff of the 241-room Marriott Saddle Brook, a full-service hotel located in northern New Jersey. The hotel secured a $24.3 million mortgage prior to resolution. Similar to many of the other lodging properties with distressed workouts this month, Marriott Saddle Brook transferred to special servicing in 2020 due to pandemic-related operational distress. The discounted payoff resulted in a realized loss of $11 million, equal to a 45% severity.

The largest individual loss and loss severity was associated with the REO liquidation of Park Plaza, a 283,326-SF regional mall located in Little Rock, AR. The property became REO in October 2021 after first transferring to special servicing in June 2019. Outstanding debt at the time of liquidation totaled $73.8 million. Realized losses from the liquidation totaled $52.2 million, equal to a 71% severity. The mall, formerly owned by CBL Properties, was sold out of REO to Second Horizon Capital with plans for revitalization. Park Plaza is anchored by Dillard’s but has had difficulty maintaining occupancy and rents from in-line tenants.

The largest workout by outstanding balance was a $300 million mortgage secured by Bergen Town Center, a 1 million-SF mall located in Paramus, NJ. The loan, which was originated in May 2013, transferred to special servicing in early-March 2023. However, the borrower, Urban Edge Properties, was able to refinance with a $290 million loan provided by New York Life and MetLife Investment Management. This one-month resolution was the quickest of all of April’s workouts.

Excluding defeased loans, there was approximately $3.4 billion in securitized debt among CMBS conduit, and Single-Borrower Large-Loan securitizations that was paid off or liquidated in April 2023, which was approximately a 38% decrease compared to $5.4 billion in March 2023. In April, 16% of the loan resolutions were categorized as dispositions, liquidations, or discounted payoffs. The percentage of distressed workouts was markedly lower in the prior month, equal to 2%. Loan prepayment remained muted in April — approximately 6% of the loans were paid off with prepayment penalties, which was in line with prior months.

Multifamily had the highest total of outstanding debt payoff by property type in April with approximately 38% of the total by balance. Retail had the next highest percentage of outstanding debt payoff with 26% of the total. The $300 million refinancing of Bergen Town Center was among the largest mortgages to pay off in April 2023.

About CRED iQ

CRED iQ is a commercial real estate data, analytics, and valuation platform providing actionable intelligence to CRE and capital markets investors. Subscribers use the platform to identify valuable leads for leasing, lending, refinancing, distressed debt, and acquisition opportunities.

The platform also offers a highly efficient valuation engine which can be leveraged across all property types and geographies. Our data platform is powered by over $2.0 trillion in transactions and data covering CRE, CMBS, CRE CLO, Single Asset Single Borrower (SASB), and all of GSE / Agency.

CRED-iQ-CMBS-April-2023-Distressed-Workouts-and-Payoffs Download

Commercial Real Estate Market Delinquency Tracker – April 2023

By

CRED iQ

-

May 3, 2023

0

CRED iQ monitors distressed rates and market performance for nearly 400 MSAs across the United States, covering over $900 billion in outstanding commercial real estate (CRE) debt. Distressed rates (DQ + SS%) include loans that are specially serviced, delinquent, or a combination of both. Distressed rates and month-over-month changes for data reported as of April 2023 are presented below for the 50 largest MSAs, broken out by property type for a granular view of distress by market-sector.

Of the 50 largest MSAs tracked by CRED iQ, the overwhelming majority exhibited month-over-month increases in the percentage of distressed CRE loans. There were 42 markets with increases in CRE distress, equal to 84% of the 50 largest MSAs. The average increase in distress was approximately 80 basis points. Notable markets with the largest increases in distress this month included Minneapolis (+2.5%), Jacksonville (+2.0%), and San Antonio (2.0%). The New Orleans (-1.8%) and Louisville (-1.1%) MSAs were among the few markets that exhibited month-over-month improvements in distressed rates during April 2023.

One of CRED iQ’s initial observations from new data revealed as of April 2023 is that many incumbent markets with the highest distressed rates were also the same markets that exhibited the sharpest month-over-month increases in distress. In other words, the worst performing markets deteriorated at the fastest rates during April 2023. Last month, CRED iQ focused on the Minneapolis MSA, which ranks as the market with the highest overall level of distress among the 50 largest MSAs — equal to 25.2%. This month, a significant increase in distress in the Chicago MSA moved the market into position for the second-highest rate of commercial real estate distress. In April 2023, Chicago exhibited a 1.3% month-over-month increase in the percentage of distressed CMBS loans, which was one of the 10 largest increases among the 50 largest MSAs.

For a more granular analysis of the Top 50 markets, CRED iQ further delineated individual markets’ distressed rates by property type for a comprehensive view by market-sector. The market-sectors with the three highest percentage increases in distress rates during April 2023 were office sectors: Atlanta (+16.5%), San Antonio (+13.2%), and Jacksonville (+6.8%). Office distress in the Atlanta market was driven by a $350 million mortgage secured by a 2.2 million-SF, eight-property suburban office portfolio owned by Adventus Realty Trust. The loan transferred to special servicing in mid-March 2023 — five of the collateral office properties are located in suburban Atlanta. The San Antonio office market was adversely impacted by the Brass Professional Center, which transferred to special servicing on March 13, 2023. The 575,771-SF suburban office property secures a $56.3 million mortgage and was most recently reported as 71% occupied as of September 2022.

Increased distress was also notable across several hotel markets after a $982 million mortgage transferred to special servicing in April 2023 ahead of its June 2023 maturity date. The mortgage is secured by 34 Ashford Hospitality Trust hotels located across multiple markets. Five of those markets, in particular, showed relatively higher increases in distress as a result of the loan’s transfer to special servicing in April 2023: Memphis, Jacksonville, New York City, San Francisco, and Philadelphia. The hotel sector across each of these five markets each ranked in the 10 largest increases in distress among all of the market-sectors tracked by CRED iQ.

The inclusion of Jacksonville-Office and Jacksonville-Hotel highlights a volatile month for the MSA, which had the second-highest increase in the percentage of distress commercial real estate loans in April 2023. The hotel distress was derived from exposure to the aforementioned Ashford Hospital Trust portfolio and additional office distress was caused by a pair of 200,000-SF Duval County office buildings that transferred to special servicing in March 2023 — The Meridian at Deerwood Park and Greystone Park. The Minneapolis MSA has the highest overall distressed rate at 25.2% and distress for the market is at its highest level over the past 18 months. Chicago (10.8%), Birmingham, AL (10.7%), Milwaukee (10.5%), and Cleveland (9.4%) comprise the remaining markets with the highest rates of distress. The Chicago MSA continued its descension in the list of poorest performing markets, entering the Top 5 last month and descending further to the second-lowest ranking in April 2023. The San Jose MSA (0.3%) displaced Salt Lake City as the market with the lowest percentage of distress among the Top 50 MSAs.

View commercial real estate distressed rates broken out by market and property type below:

MSA – Property Type	DQ/SS (millions)	DQ/SS (%)	Monthly Change
Allentown-Bethlehem-Easton, PA-NJ MSA	$77.8	2.6%	0.2%
Allentown – Hotel	$1.1	3.1%	-0.2%
Allentown – Industrial	$0.0	0.0%	0.0%
Allentown – Multifamily	$0.0	0.0%	0.0%
Allentown – Office	$57.9	18.5%	0.0%
Allentown – Other	$0.0	0.0%	0.0%
Allentown – Retail	$18.9	5.2%	0.2%
Allentown – Self Storage	$0.0	0.0%	0.0%
Atlanta-Sandy Springs-Marietta, GA MSA	$665.9	2.9%	1.2%
Atlanta – Hotel	$90.0	3.6%	1.0%
Atlanta – Industrial	$0.0	0.0%	0.0%
Atlanta – Multifamily	$4.0	0.0%	0.0%
Atlanta – Office	$438.8	20.3%	16.5%
Atlanta – Other	$0.0	0.0%	0.0%
Atlanta – Retail	$133.1	7.1%	-7.4%
Atlanta – Self Storage	$0.0	0.0%	0.0%
Austin-Round Rock, TX MSA	$126.4	1.6%	0.4%
Austin – Hotel	$69.5	7.9%	1.4%
Austin – Industrial	$0.0	0.0%	0.0%
Austin – Multifamily	$0.0	0.0%	0.0%
Austin – Office	$0.0	0.0%	0.0%
Austin – Other	$8.3	1.9%	0.9%
Austin – Retail	$48.7	6.4%	-0.6%
Austin – Self Storage	$0.0	0.0%	0.0%
Baltimore-Towson, MD MSA	$394.6	4.9%	1.7%
Baltimore – Hotel	$65.4	14.4%	2.1%
Baltimore – Industrial	$0.0	0.0%	0.0%
Baltimore – Multifamily	$5.2	0.1%	0.0%
Baltimore – Office	$65.7	7.4%	-0.1%
Baltimore – Other	$11.5	6.7%	1.2%
Baltimore – Retail	$246.9	23.0%	7.7%
Baltimore – Self Storage	$0.0	0.0%	0.0%
Birmingham-Hoover, AL MSA	$300.8	10.7%	0.9%
Birmingham – Hotel	$10.3	7.6%	-1.6%
Birmingham – Industrial	$0.0	0.0%	0.0%
Birmingham – Multifamily	$0.0	0.0%	0.0%
Birmingham – Office	$120.5	23.5%	-0.2%
Birmingham – Other	$0.0	0.0%	0.0%
Birmingham – Retail	$169.9	23.2%	-0.1%
Birmingham – Self Storage	$0.0	0.0%	0.0%
Boston-Cambridge-Quincy, MA-NH MSA	$161.4	0.9%	-0.2%
Boston – Hotel	$19.3	1.1%	-2.2%
Boston – Industrial	$0.0	0.0%	0.0%
Boston – Multifamily	$0.0	0.0%	0.0%
Boston – Office	$50.3	0.7%	0.0%
Boston – Other	$0.0	0.0%	-0.1%
Boston – Retail	$91.8	5.1%	-1.9%
Boston – Self Storage	$0.0	0.0%	0.0%
Bridgeport-Stamford-Norwalk, CT MSA	$138.9	3.6%	-0.9%
Bridgeport – Hotel	$38.8	25.8%	-0.2%
Bridgeport – Industrial	$17.8	18.6%	3.6%
Bridgeport – Multifamily	$0.0	0.0%	0.0%
Bridgeport – Office	$72.5	6.1%	-4.9%
Bridgeport – Other	$9.8	2.2%	-0.4%
Bridgeport – Retail	$0.0	0.0%	0.0%
Bridgeport – Self Storage	$0.0	0.0%	0.0%
Charlotte-Gastonia-Concord, NC-SC MSA	$591.6	9.3%	1.4%
Charlotte – Hotel	$39.5	4.5%	-0.8%
Charlotte – Industrial	$0.0	0.0%	0.0%
Charlotte – Multifamily	$0.0	0.0%	0.0%
Charlotte – Office	$353.9	36.6%	0.0%
Charlotte – Other	$114.8	30.5%	-5.8%
Charlotte – Retail	$83.4	8.2%	-0.5%
Charlotte – Self Storage	$0.0	0.0%	0.0%
Chicago-Naperville-Joliet, IL-IN-WI MSA	$2,853.0	10.8%	1.3%
Chicago – Hotel	$739.6	41.9%	1.3%
Chicago – Industrial	$0.0	0.0%	0.0%
Chicago – Multifamily	$57.4	0.8%	0.3%
Chicago – Office	$1,623.2	19.5%	1.1%
Chicago – Other	$205.0	8.7%	0.1%
Chicago – Retail	$227.8	7.3%	0.1%
Chicago – Self Storage	$0.0	0.0%	0.0%
Cincinnati-Middletown, OH-KY-IN MSA	$136.4	3.8%	0.7%
Cincinnati – Hotel	$86.5	31.4%	1.2%
Cincinnati – Industrial	$0.0	0.0%	0.0%
Cincinnati – Multifamily	$0.0	0.0%	0.0%
Cincinnati – Office	$0.0	0.0%	0.0%
Cincinnati – Other	$6.8	3.2%	0.6%
Cincinnati – Retail	$43.2	7.5%	1.4%
Cincinnati – Self Storage	$0.0	0.0%	0.0%
Cleveland-Elyria-Mentor, OH MSA	$352.7	9.4%	-0.9%
Cleveland – Hotel	$84.4	50.2%	3.7%
Cleveland – Industrial	$0.0	0.0%	0.0%
Cleveland – Multifamily	$0.0	0.0%	0.0%
Cleveland – Office	$89.4	9.9%	-8.3%
Cleveland – Other	$171.4	43.7%	0.7%
Cleveland – Retail	$7.6	1.1%	0.0%
Cleveland – Self Storage	$0.0	0.0%	0.0%
Columbus, OH MSA	$190.8	3.4%	0.7%
Columbus, OH – Hotel	$19.0	7.0%	0.2%
Columbus, OH – Industrial	$0.0	0.0%	0.0%
Columbus, OH – Multifamily	$0.0	0.0%	0.0%
Columbus, OH – Office	$57.3	8.2%	-0.1%
Columbus, OH – Other	$0.0	0.0%	0.0%
Columbus, OH – Retail	$114.5	13.1%	0.3%
Columbus, OH – Self Storage	$0.0	0.0%	0.0%
Dallas-Fort Worth-Arlington, TX MSA	$308.0	1.1%	0.3%
Dallas – Hotel	$124.1	3.7%	1.7%
Dallas – Industrial	$0.0	0.0%	0.0%
Dallas – Multifamily	$0.0	0.0%	0.0%
Dallas – Office	$139.1	4.5%	-0.2%
Dallas – Other	$5.3	0.3%	-0.2%
Dallas – Retail	$39.4	2.2%	0.3%
Dallas – Self Storage	$0.0	0.0%	0.0%
Denver-Aurora, CO MSA	$786.6	6.3%	1.3%
Denver – Hotel	$18.7	2.2%	0.0%
Denver – Industrial	$0.0	0.0%	0.0%
Denver – Multifamily	$0.0	0.0%	0.0%
Denver – Office	$687.4	32.1%	1.6%
Denver – Other	$34.3	4.3%	-5.6%
Denver – Retail	$46.2	3.2%	-0.2%
Denver – Self Storage	$0.0	0.0%	0.0%
Detroit-Warren-Livonia, MI MSA	$264.0	2.7%	0.0%
Detroit – Hotel	$83.8	12.7%	1.0%
Detroit – Industrial	$18.8	2.9%	-0.3%
Detroit – Multifamily	$1.3	0.0%	0.0%
Detroit – Office	$18.2	0.7%	-0.1%
Detroit – Other	$0.0	0.0%	-2.7%
Detroit – Retail	$142.0	9.7%	0.1%
Detroit – Self Storage	$0.0	0.0%	0.0%
Hartford-West Hartford-East Hartford, CT MSA	$154.8	7.3%	-0.2%
Hartford – Hotel	$4.2	3.5%	-33.5%
Hartford – Industrial	$0.0	0.0%	0.0%
Hartford – Multifamily	$0.0	0.0%	0.0%
Hartford – Office	$24.9	8.7%	0.0%
Hartford – Other	$0.0	0.0%	0.0%
Hartford – Retail	$125.7	43.2%	4.5%
Hartford – Self Storage	$0.0	0.0%	0.0%
Houston-Sugar Land-Baytown, TX MSA	$1,268.3	5.8%	1.0%
Houston – Hotel	$446.2	46.4%	-1.9%
Houston – Industrial	$32.7	5.3%	0.7%
Houston – Multifamily	$10.5	0.1%	-0.1%
Houston – Office	$642.3	17.9%	1.8%
Houston – Other	$117.8	17.3%	6.0%
Houston – Retail	$18.9	0.5%	-1.6%
Houston – Self Storage	$0.0	0.0%	0.0%
Indianapolis-Carmel, IN MSA	$168.5	3.4%	0.8%
Indianapolis – Hotel	$92.2	16.6%	1.0%
Indianapolis – Industrial	$0.0	0.0%	0.0%
Indianapolis – Multifamily	$1.7	0.1%	0.1%
Indianapolis – Office	$59.8	9.4%	-0.2%
Indianapolis – Other	$0.0	0.0%	0.0%
Indianapolis – Retail	$14.8	3.8%	3.2%
Indianapolis – Self Storage	$0.0	0.0%	0.0%
Jacksonville, FL MSA	$174.5	4.1%	2.0%
Jacksonville – Hotel	$24.4	6.2%	6.2%
Jacksonville – Industrial	$0.0	0.0%	0.0%
Jacksonville – Multifamily	$0.0	0.0%	0.0%
Jacksonville – Office	$38.2	6.8%	6.8%
Jacksonville – Other	$0.0	0.0%	0.0%
Jacksonville – Retail	$111.9	25.4%	-3.5%
Jacksonville – Self Storage	$0.0	0.0%	0.0%
Kansas City, MO-KS MSA	$99.9	2.1%	0.3%
Kansas City – Hotel	$29.3	12.4%	0.0%
Kansas City – Industrial	$0.0	0.0%	0.0%
Kansas City – Multifamily	$2.5	0.1%	0.0%
Kansas City – Office	$0.0	0.0%	0.0%
Kansas City – Other	$20.9	11.5%	1.0%
Kansas City – Retail	$47.3	8.5%	0.0%
Kansas City – Self Storage	$0.0	0.0%	0.0%
Las Vegas-Paradise, NV MSA	$565.9	2.7%	0.2%
Las Vegas – Hotel	$18.3	0.2%	0.2%
Las Vegas – Industrial	$0.0	0.0%	0.0%
Las Vegas – Multifamily	$0.0	0.0%	0.0%
Las Vegas – Office	$0.0	0.0%	0.0%
Las Vegas – Other	$325.0	39.3%	-1.0%
Las Vegas – Retail	$222.6	5.8%	-1.1%
Las Vegas – Self Storage	$0.0	0.0%	0.0%
Los Angeles-Long Beach-Santa Ana, CA MSA	$2,109.7	4.2%	1.1%
Los Angeles – Hotel	$162.0	3.2%	1.7%
Los Angeles – Industrial	$0.0	0.0%	0.0%
Los Angeles – Multifamily	$5.2	0.0%	0.0%
Los Angeles – Office	$780.3	5.9%	2.3%
Los Angeles – Other	$131.5	3.9%	0.5%
Los Angeles – Retail	$1,023.2	15.6%	0.0%
Los Angeles – Self Storage	$7.6	0.9%	0.0%
Louisville/Jefferson County, KY-IN MSA	$30.3	1.1%	-1.1%
Louisville – Hotel	$0.0	0.0%	0.0%
Louisville – Industrial	$0.0	0.0%	0.0%
Louisville – Multifamily	$0.0	0.0%	0.0%
Louisville – Office	$0.0	0.0%	0.0%
Louisville – Other	$0.0	0.0%	0.0%
Louisville – Retail	$30.3	6.1%	-7.7%
Louisville – Self Storage	$0.0	0.0%	0.0%
Memphis, TN-AR-MS MSA	$80.3	3.8%	0.6%
Memphis – Hotel	$28.3	12.8%	6.8%
Memphis – Industrial	$0.0	0.0%	0.0%
Memphis – Multifamily	$0.0	0.0%	0.0%
Memphis – Office	$0.0	0.0%	0.0%
Memphis – Other	$5.3	18.0%	3.3%
Memphis – Retail	$46.8	12.3%	-4.1%
Memphis – Self Storage	$0.0	0.0%	0.0%
Miami-Fort Lauderdale-Pompano Beach, FL MSA	$322.2	1.3%	0.3%
Miami – Hotel	$70.5	1.3%	0.6%
Miami – Industrial	$0.0	0.0%	0.0%
Miami – Multifamily	$1.4	0.0%	0.0%
Miami – Office	$4.1	0.1%	0.0%
Miami – Other	$0.0	0.0%	0.0%
Miami – Retail	$246.2	4.5%	0.8%
Miami – Self Storage	$0.0	0.0%	0.0%
Milwaukee-Waukesha-West Allis, WI MSA	$221.8	10.5%	1.6%
Milwaukee – Hotel	$16.5	10.8%	0.5%
Milwaukee – Industrial	$0.0	0.0%	0.0%
Milwaukee – Multifamily	$0.0	0.0%	0.0%
Milwaukee – Office	$99.9	16.6%	-1.1%
Milwaukee – Other	$0.0	0.0%	0.0%
Milwaukee – Retail	$105.4	23.7%	0.6%
Milwaukee – Self Storage	$0.0	0.0%	0.0%
Minneapolis-St. Paul-Bloomington, MN-WI MSA	$1,919.3	25.2%	2.5%
Minneapolis – Hotel	$265.1	43.8%	-0.7%
Minneapolis – Industrial	$0.0	0.0%	0.0%
Minneapolis – Multifamily	$8.0	0.4%	0.4%
Minneapolis – Office	$87.9	4.2%	-0.2%
Minneapolis – Other	$158.2	33.0%	1.2%
Minneapolis – Retail	$1,400.0	73.7%	-0.4%
Minneapolis – Self Storage	$0.0	0.0%	0.0%
Nashville-Davidson-Murfreesboro-Franklin, TN MSA	$64.6	1.3%	0.2%
Nashville – Hotel	$51.5	3.5%	0.1%
Nashville – Industrial	$0.0	0.0%	0.0%
Nashville – Multifamily	$0.0	0.0%	0.0%
Nashville – Office	$0.0	0.0%	0.0%
Nashville – Other	$0.0	0.0%	0.0%
Nashville – Retail	$13.0	1.7%	0.0%
Nashville – Self Storage	$0.0	0.0%	0.0%
New Orleans-Metairie-Kenner, LA MSA	$58.5	1.6%	-1.8%
New Orleans – Hotel	$0.0	0.0%	-5.2%
New Orleans – Industrial	$0.0	0.0%	0.0%
New Orleans – Multifamily	$11.3	1.4%	0.5%
New Orleans – Office	$27.0	4.9%	-0.1%
New Orleans – Other	$14.7	9.7%	0.2%
New Orleans – Retail	$5.6	0.7%	-1.1%
New Orleans – Self Storage	$0.0	0.0%	0.0%
New York-Northern New Jersey-Long Island, NY-NJ-PA MSA	$7,619.0	6.1%	0.8%
New York City – Hotel	$1,001.8	24.4%	4.2%
New York City – Industrial	$120.2	2.8%	-0.2%
New York City – Multifamily	$951.1	3.3%	1.2%
New York City – Office	$1,324.8	2.8%	-0.1%
New York City – Other	$1,786.5	7.5%	0.7%
New York City – Retail	$2,434.6	19.2%	1.1%
New York City – Self Storage	$0.0	0.0%	0.0%
Orlando-Kissimmee, FL MSA	$102.2	1.2%	0.1%
Orlando – Hotel	$13.5	0.5%	-0.3%
Orlando – Industrial	$0.0	0.0%	0.0%
Orlando – Multifamily	$0.0	0.0%	0.0%
Orlando – Office	$60.4	11.1%	-2.2%
Orlando – Other	$0.0	0.0%	0.0%
Orlando – Retail	$28.3	3.1%	-0.1%
Orlando – Self Storage	$0.0	0.0%	0.0%
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA	$1,122.3	5.9%	1.7%
Philadelphia – Hotel	$159.3	17.6%	3.2%
Philadelphia – Industrial	$10.3	0.3%	0.0%
Philadelphia – Multifamily	$107.4	1.5%	1.1%
Philadelphia – Office	$424.6	10.8%	3.1%
Philadelphia – Other	$389.0	29.5%	-1.5%
Philadelphia – Retail	$31.8	1.5%	0.6%
Philadelphia – Self Storage	$0.0	0.0%	0.0%
Phoenix-Mesa-Scottsdale, AZ MSA	$253.6	1.5%	0.3%
Phoenix – Hotel	$63.0	3.7%	1.8%
Phoenix – Industrial	$0.0	0.0%	0.0%
Phoenix – Multifamily	$0.0	0.0%	0.0%
Phoenix – Office	$48.1	2.1%	-0.3%
Phoenix – Other	$8.5	0.9%	0.0%
Phoenix – Retail	$133.9	7.9%	1.4%
Phoenix – Self Storage	$0.0	0.0%	0.0%
Pittsburgh, PA MSA	$248.3	6.2%	1.1%
Pittsburgh – Hotel	$29.9	15.3%	2.6%
Pittsburgh – Industrial	$0.0	0.0%	0.0%
Pittsburgh – Multifamily	$1.5	0.1%	0.1%
Pittsburgh – Office	$103.9	9.8%	0.6%
Pittsburgh – Other	$105.2	30.0%	0.0%
Pittsburgh – Retail	$7.8	1.5%	0.1%
Pittsburgh – Self Storage	$0.0	0.0%	0.0%
Portland-Vancouver-Beaverton, OR-WA MSA	$315.6	4.3%	0.2%
Portland – Hotel	$295.9	33.5%	0.2%
Portland – Industrial	$0.0	0.0%	0.0%
Portland – Multifamily	$0.0	0.0%	-0.9%
Portland – Office	$19.7	4.3%	-0.7%
Portland – Other	$0.0	0.0%	0.0%
Portland – Retail	$0.0	0.0%	0.0%
Portland – Self Storage	$0.0	0.0%	0.0%
Raleigh-Cary, NC MSA	$32.4	1.0%	0.1%
Raleigh – Hotel	$15.3	6.4%	0.1%
Raleigh – Industrial	$0.0	0.0%	0.0%
Raleigh – Multifamily	$0.0	0.0%	0.0%
Raleigh – Office	$0.0	0.0%	0.0%
Raleigh – Other	$6.6	2.9%	-0.7%
Raleigh – Retail	$10.6	3.8%	-0.1%
Raleigh – Self Storage	$0.0	0.0%	0.0%
Richmond, VA MSA	$157.2	5.8%	1.1%
Richmond – Hotel	$0.0	0.0%	0.0%
Richmond – Industrial	$0.0	0.0%	0.0%
Richmond – Multifamily	$0.0	0.0%	0.0%
Richmond – Office	$0.0	0.0%	0.0%
Richmond – Other	$12.8	8.8%	0.0%
Richmond – Retail	$144.4	30.3%	-0.6%
Richmond – Self Storage	$0.0	0.0%	0.0%
Riverside-San Bernardino-Ontario, CA MSA	$295.1	2.8%	-0.1%
Riverside – Hotel	$44.1	8.9%	-2.6%
Riverside – Industrial	$0.0	0.0%	0.0%
Riverside – Multifamily	$1.4	0.1%	0.1%
Riverside – Office	$0.0	0.0%	0.0%
Riverside – Other	$0.0	0.0%	0.0%
Riverside – Retail	$249.6	11.8%	-0.6%
Riverside – Self Storage	$0.0	0.0%	0.0%
Sacramento-Arden-Arcade-Roseville, CA MSA	$16.9	0.4%	0.1%
Sacramento – Hotel	$0.0	0.0%	0.0%
Sacramento – Industrial	$0.0	0.0%	0.0%
Sacramento – Multifamily	$0.0	0.0%	0.0%
Sacramento – Office	$6.1	0.8%	0.0%
Sacramento – Other	$10.9	3.7%	0.8%
Sacramento – Retail	$0.0	0.0%	0.0%
Sacramento – Self Storage	$0.0	0.0%	0.0%
Salt Lake City, UT MSA	$12.7	0.3%	0.1%
Salt Lake City – Hotel	$6.1	2.1%	0.2%
Salt Lake City – Industrial	$0.0	0.0%	0.0%
Salt Lake City – Multifamily	$0.0	0.0%	0.0%
Salt Lake City – Office	$0.0	0.0%	0.0%
Salt Lake City – Other	$0.0	0.0%	0.0%
Salt Lake City – Retail	$6.6	1.0%	0.5%
Salt Lake City – Self Storage	$0.0	0.0%	0.0%
San Antonio, TX MSA	$188.3	4.0%	2.0%
San Antonio – Hotel	$17.4	8.8%	1.9%
San Antonio – Industrial	$0.0	0.0%	0.0%
San Antonio – Multifamily	$0.0	0.0%	0.0%
San Antonio – Office	$56.3	13.2%	13.2%
San Antonio – Other	$0.0	0.0%	0.0%
San Antonio – Retail	$114.6	15.3%	0.5%
San Antonio – Self Storage	$0.0	0.0%	0.0%
San Diego-Carlsbad-San Marcos, CA MSA	$63.6	0.7%	0.3%
San Diego – Hotel	$56.6	3.4%	1.4%
San Diego – Industrial	$0.0	0.0%	0.0%
San Diego – Multifamily	$4.1	0.1%	0.0%
San Diego – Office	$0.0	0.0%	0.0%
San Diego – Other	$0.0	0.0%	0.0%
San Diego – Retail	$2.9	0.2%	0.0%
San Diego – Self Storage	$0.0	0.0%	0.0%
San Francisco-Oakland-Fremont, CA MSA	$1,269.7	4.9%	1.7%
San Francisco – Hotel	$209.4	7.0%	3.6%
San Francisco – Industrial	$0.0	0.0%	0.0%
San Francisco – Multifamily	$447.6	6.9%	1.3%
San Francisco – Office	$437.8	4.1%	2.1%
San Francisco – Other	$128.6	4.0%	2.6%
San Francisco – Retail	$46.4	4.1%	-0.3%
San Francisco – Self Storage	$0.0	0.0%	0.0%
San Jose-Sunnyvale-Santa Clara, CA MSA	$58.3	0.3%	0.0%
San Jose – Hotel	$35.2	0.5%	0.0%
San Jose – Industrial	$0.0	0.0%	0.0%
San Jose – Multifamily	$0.0	0.0%	0.0%
San Jose – Office	$23.1	0.3%	0.0%
San Jose – Other	$0.0	0.0%	0.0%
San Jose – Retail	$0.0	0.0%	0.0%
San Jose – Self Storage	$0.0	0.0%	0.0%
Seattle-Tacoma-Bellevue, WA MSA	$83.6	0.4%	0.1%
Seattle – Hotel	$61.2	4.3%	0.0%
Seattle – Industrial	$0.0	0.0%	0.0%
Seattle – Multifamily	$0.0	0.0%	0.0%
Seattle – Office	$0.0	0.0%	0.0%
Seattle – Other	$22.4	1.5%	1.5%
Seattle – Retail	$0.0	0.0%	0.0%
Seattle – Self Storage	$0.0	0.0%	0.0%
St. Louis, MO-IL MSA	$208.3	5.2%	0.4%
St. Louis – Hotel	$1.7	0.5%	0.0%
St. Louis – Industrial	$0.0	0.0%	0.0%
St. Louis – Multifamily	$3.2	0.2%	0.1%
St. Louis – Office	$0.0	0.0%	0.0%
St. Louis – Other	$14.0	2.4%	-0.4%
St. Louis – Retail	$189.4	19.3%	-0.5%
St. Louis – Self Storage	$0.0	0.0%	0.0%
Tampa-St. Petersburg-Clearwater, FL	$112.1	1.2%	0.1%
Tampa – Hotel	$62.9	9.3%	1.1%
Tampa – Industrial	$0.0	0.0%	0.0%
Tampa – Multifamily	$1.2	0.0%	0.0%
Tampa – Office	$19.6	2.6%	0.0%
Tampa – Other	$0.0	0.0%	0.0%
Tampa – Retail	$28.4	3.9%	-1.1%
Tampa – Self Storage	$0.0	0.0%	0.0%
Tucson, AZ MSA	$156.5	5.2%	0.7%
Tucson – Hotel	$0.0	0.0%	0.0%
Tucson – Industrial	$0.0	0.0%	0.0%
Tucson – Multifamily	$0.0	0.0%	0.0%
Tucson – Office	$0.0	0.0%	0.0%
Tucson – Other	$0.0	0.0%	0.0%
Tucson – Retail	$156.5	19.8%	0.9%
Tucson – Self Storage	$0.0	0.0%	0.0%
Virginia Beach-Norfolk-Newport News, VA-NC MSA	$182.8	4.6%	0.7%
Virginia Beach – Hotel	$14.8	3.4%	-1.5%
Virginia Beach – Industrial	$0.0	0.0%	0.0%
Virginia Beach – Multifamily	$0.0	0.0%	0.0%
Virginia Beach – Office	$0.0	0.0%	0.0%
Virginia Beach – Other	$4.4	3.0%	-0.4%
Virginia Beach – Retail	$163.6	18.3%	-0.8%
Virginia Beach – Self Storage	$0.0	0.0%	0.0%
Washington-Arlington-Alexandria, DC-VA-MD-WV MSA	$1,003.9	3.5%	0.9%
Washington, DC – Hotel	$41.8	3.8%	0.9%
Washington, DC – Industrial	$0.0	0.0%	0.0%
Washington, DC – Multifamily	$0.0	0.0%	0.0%
Washington, DC – Office	$789.0	10.0%	1.5%
Washington, DC – Other	$38.6	2.8%	0.1%
Washington, DC – Retail	$134.3	3.8%	-0.1%
Washington, DC – Self Storage	$0.0	0.0%	0.0%
Grand Total	$28,090.0	4.3%	0.8%

About CRED iQ

CRED iQ is a commercial real estate data, analytics, and valuation platform providing actionable intelligence to CRE and capital markets investors. Subscribers use the platform to identify valuable leads for leasing, lending, refinancing, distressed debt, and acquisition opportunities.

The platform also offers a highly efficient valuation engine which can be leveraged across all property types and geographies. Our data platform is powered by over $2.0 trillion in transactions and data covering CRE, CMBS, CRE CLO, Single Asset Single Borrower (SASB), and all of GSE / Agency.

CRED-iQ-Market-Delinquency-Tracker-April-2023 Download

April 2023 Delinquency Report

By

CRED iQ

-

April 27, 2023

0

The CRED iQ delinquency rate for CMBS for the month of April 2023 increased for the third consecutive month to 3.93%. The delinquency rate was 16 basis points higher than the prior month’s rate of 3.77%. Increased distress in commercial real estate has deservedly dominated the March and April news cycles and underlying data compiled by CRED iQ for April 2023 underpinned continued commentary on industry distress. The delinquency rate is equal to the percentage of all delinquent specially serviced loans and delinquent non-specially serviced loans, for CRED iQ’s sample universe of $600+ billion in CMBS conduit and single asset single-borrower (SASB) loans. CRED iQ’s special servicing rate, equal to the percentage of CMBS loans that are with the special servicer (delinquent and non-delinquent), declined month-over-month to 5.39% from 5.53%. This month’s decline in the special servicing rate indicated that workout activity was present and ongoing in the wake of additional delinquencies. Aggregating the two indicators of distress – delinquency rate and special servicing rate – into an overall distressed rate (DQ + SS%) equals 6.08% of CMBS loans that are specially serviced, delinquent, or a combination of both. The increase in delinquent loans outweighed a relatively smaller decline in special servicing for a net increase in the overall CMBS distressed rate, which compares to the prior month’s distressed rate of 5.73%. Distressed rates generally track slightly higher than special servicing rates as most delinquent loans are also with the special servicer.

Headwinds intensified for the office sector in April 2023 after additional delinquencies were the source of a month-over-month surge in the percentage of delinquent office loans. The delinquency rate for loans secured by office properties increased to 3.81%, which was 72 basis points higher than March and represented a 23% month-over-month increase. The office delinquency rate has increased for five consecutive months and is more than 2x higher than a year prior. Drivers behind April’s rise in office delinquencies included a $240 million mortgage secured by 600 California Street, a 359,883-SF office tower in San Francisco, CA. The loan was recently reported as 30 days delinquent and also transferred to special servicing in late-March 2023. The embattled coworking firm WeWork is a primary tenant at the property, leasing 52% of the NRA, and is also a general partner in the ownership structure of the building.

The consistent rise in office delinquency is concurrent with a recovery in lodging delinquency, drawing the delinquency rates for both property types closer together. The lodging delinquency rate as of April 2023 was 4.21%, a decline compared to March 2023’s rate of 4.58%. As a point of reference, the delinquency rate for lodging in 2020 during the onset of the pandemic was north of 20% — a substantial recovery for the lodging industry. April’s delinquency decline for lodging narrows the gap between office delinquency (3.81%) and lodging delinquency (4.21%) to just 40 basis points.

The delinquency rate for retail (7.55%) exhibited a month-over-month decline while the CMBS multifamily delinquency rate (3.25%) increased for the second consecutive month. Delinquency rates for industrial (0.33%) and self-storage (0.05%) were relatively unchanged compared to the prior month.

Shifting focus to special servicing rates, CRED iQ observed increases for the office, lodging, and multifamily sectors. Only the special servicing rate for retail properties (11.04%) exhibited a month-over-month decline. Office again took the spotlight as the property type with the highest percentage change in special servicing, increasing from 4.97% as of March 2023 to 5.57% as of April 2203 – equal to a 12% change. Central business district submarkets were responsible for an oversized segment of newly transferred office loans. Examples included an $84.5 million mortgage secured by The Wanamaker Building in Philadelphia, PA and a $56.5 million loan secured by a 190,385-SF office building located at 1201 Connecticut Avenue NW in Washington, DC. Both properties are encumbered by floating-rate debt, factoring into the loans’ credit concerns. CRED iQ first noted lease expiration concerns for The Wanamaker Building’s primary tenants back in April 2022.

Loans secured from suburban office properties were not immune from adverse headwinds either. A $350 million mortgage secured by a 2.2 million-SF, eight-property suburban office portfolio owned by Adventus Realty Trust, with properties located in Illinois and Georgia, transferred to special servicing in Mid-March 2023. Additionally in mid-March 2023, a $161.4 million mortgage secured by nine Brookfield office properties, primarily located in suburban Washington, DC transferred to special servicing.

Aside from the office sector, the special servicing rate for lodging came in at 6.35%, a modest increase compared to March 2023. Multifamily (4.02%) also exhibited an increase in its special servicing rate. The special servicing rate for industrial properties remained relatively unchanged while self-storage did not have any specially serviced inventory.

CRED iQ’s CMBS distressed rate (DQ + SS%) by property type accounts for loans that qualify for either delinquent or special servicing subsets. This month, the overall distressed rate for CMBS increased to 6.08%. The increase was 35 basis points higher than March’s distressed rate (5.73%), equal to a 6% increase. CRED iQ’s overall distressed rate is at its highest level since March 2022.

For additional information about two of this month’s largest loans that transferred to special servicing, click View Details below:

	[View Details]	[View Details]
Loan	600 California Street	The Wanamaker Building
Balance	$240 million	$84.5 million
Special Servicer Transfer Date	3/24/2023	3/27/2023

About CRED iQ

CRED iQ is a commercial real estate data, analytics, and valuation platform providing actionable intelligence to CRE and capital markets investors. Subscribers use the platform to identify valuable leads for leasing, lending, refinancing, distressed debt, and acquisition opportunities.

The platform also offers a highly efficient valuation engine which can be leveraged across all property types and geographies. Our data platform is powered by over $2.0 trillion in transactions and data covering CRE, CMBS, CRE CLO, Single Asset Single Borrower (SASB), and all of GSE / Agency.

CRED-iQ-April-2023-Delinquency-Report Download

Mounting Commercial Real Estate Maturity Defaults

By

CRED iQ

-

April 20, 2023

0

The oft-publicized wall of maturities is at the forefront of concerns for the commercial real estate industry. In December 2022, CRED iQ highlighted $162 billion in securitized commercial real estate debt that was scheduled to mature in 2023 with its CRE Maturity Outlook at the beginning of the year. So far in the CMBS universe from January 2023 through March 2023, there has been more than $3.7 billion in new maturity defaults with loans failing to pay off on a timely basis. Further, the aggregate amount of CMBS debt in maturity default has increased by approximately 28% over the past 12 months. To provide further context and visualization into maturity risk and trends, CRED iQ completed a more granular analysis of CMBS loans in maturity default. Maturity defaults for our analysis are defined by loans whose maturity dates have passed without being paid off and continued monthly debt service is not being paid by the borrowers. Loans whose maturity dates have passed and borrowers continued remitting monthly debt servicer were excluded as well as certain floating-rate loans that were in the process of finalizing optional maturity extensions.

The first compilation of data is a trailing 12-month view of total CMBS maturity defaults. Although the CMBS universe is only of portion of the entire commercial real estate debt universe, the data can offer insight with a partial view of the wider population. Starting in April 2022, total CMBS maturity defaults totaled approximately $6.6 million. The aggregate total declined below $4 billion in July 2022 and then consistently and successively increased through March 2023 when the aggregate total of maturity defaults was equal to approximately $8.4 billion. Unsurprisingly, the rise in maturity defaults was concurrent with rising interest rates; though the inability to refinance debt was causally linked to idiosyncratic credit factors as well as macro trends.

A second compilation of data parsed out new CMBS maturity defaults by month. New maturity defaults are defined as loans that entered maturity default in a given month that were not in maturity default during the prior month. Monthly totals of new additions give a view of the velocity of maturity defaults over a trailing 12-month period and exhibits, on a net basis, that more debt is entering maturity default than is getting worked out of maturity default. Aside from an outlying month in August 2022, the amount of new CMBS debt entering maturity default increased in consecutive months from May 2022 through January 2023. January 2023 had the highest aggregate total of new maturity defaults over the past year with approximately $1.7 billion. New maturity defaults were significantly lower in February 2023 ($776.5 million) but increased again in March 2023 ($1.2 billion). New CMBS maturity defaults by month were overlayed with aggregate running totals to provide visual context for the increase in maturity defaults over the past year.

From our observations, in line with headline risk, loans secured by office properties are the primary driver behind the increase in maturity defaults over the past 12 months. Of the $1.2 billion in outstanding CMBS debt that entered maturity default during March 2023, approximately 69% was attributed to office properties. Loans secured by retail contributed to 22% of new maturity default additions by outstanding balance. The office property type anchors conversations surrounding commercial real estate credit risk with the sector facing continuously adverse headwinds. CMBS maturity defaults attributed to office properties totaled $925 million as of April 2022, but the aggregate total of office maturity defaults has increased to approximately $1.8 billion as of March 2023 — equal to a 90% increase.

Though there has been a run up in maturity defaults by office loans, the property type historically has not accounted for the majority of outstanding CMBS debt that has been in maturity default. Over the past 12 months, loans secured by retail properties has accounted for between 42% and 58% of aggregate maturity defaults in a given month. Hotel properties generally accounted for the second-highest total, ranging from 17% to 35% of total CMBS debt in maturity default. Office loans have not accounted for more than 16% of maturity defaults in any given month between April 2022 and February 2023; however, the total increased to 21% in March 2023 with the most recent surge of office maturity defaults, surpassing the total for hotel loans.

The composition of property types among loans in maturity default will certainly change over time; however, we expect a temporary credit crunch to facilitate additional maturity defaults over the near term. Relatively recently, a $982 million mortgage secured by 34 Ashford Hospitality Trust hotels transferred to special servicing due to maturity default ahead of the loan’s June 2023 maturity date. Without a high volume of workout activity, maturity defaults may continue to mount higher.

About CRED iQ

CRED iQ is a commercial real estate data, analytics, and valuation platform providing actionable intelligence to CRE and capital markets investors. Subscribers use the platform to identify valuable leads for leasing, lending, refinancing, distressed debt, and acquisition opportunities.

The platform also offers a highly efficient valuation engine which can be leveraged across all property types and geographies. Our data platform is powered by over $2.0 trillion in transactions and data covering CRE, CMBS, CRE CLO, Single Asset Single Borrower (SASB), and all of GSE / Agency.

CRED-iQ-Mounting-Maturity-Defaults-2 Download