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Watchlist Triggers for the First Half of 2023

By
Michael Haas
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0

CRED iQ examined loans that were added to the Watchlist in 2023.  Our research team wanted to understand the underlying factors so far year.   

As of the July 2023 remittance reports, CRED iQ has conducted its CRE watchlist analysis for loan and property data. In 2023, the Year-to-Date count of loans on the servicer watchlist has reached approximately 12,000 loans. In the reporting month of July 2023, CRED iQ identified just over 4,600 loans that have been recently added to the watchlist.

  • 36.5% of all Watchlist loans were attributable to DSCR triggers –both fixed rate and floating rate. 
  • Pending Maturity or ARD represented 13.5% of the names on the list—a increase of 4.5% vs all Watchlist accounts in our database
  • Occupancy Decrease (excluding logging) accounted for 9.5%. of loans added to the watchlist in 2023—surprisingly a slight decrease against the overall Watchlist factor of 11.7%. 
  • Major tenant expirations were attributable to 2.3% of Watchlist loans so far this year –a fractional increase of .3% against all Watchlist filings  

One recent example, is 1166 Avenue of the Americas, a 195,375-SF office tower in Manhattan that is encumbered by $130M in debt.  The loan was recently added to the watchlist according to CRED iQ data due to its largest tenants vacating.  The largest tenant, D.E. Shaw, (44% of the GLA) will be moving out as well as Arcesium, 20% of GLA) is actively looking for new office space as its lease expires in June 2024.  The loss of those two tenants could reduce the building’s total revenue by $8-$9M, which will negatively impact its DSCR. 

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What is a Commercial Real Estate Watchlist and Why is it Important?

The Watchlist is a specialized designation that tracks and monitors properties and loans that are experiencing delinquency or non-payment of their financial obligations. This watchlist is particularly relevant for lenders, investors, and real estate professionals who want to keep a close eye on the performance of commercial real estate loans and identify potential risks in their portfolios.

Key features and benefits of a commercial real estate delinquency watchlist include:

  1. Identifying Troubled Assets: The watchlist helps lenders and investors identify properties and loans that are experiencing payment issues, providing early warnings of potential financial distress.
  2. Risk Management: Monitoring delinquencies helps in assessing the overall risk exposure of a commercial real estate portfolio and allows for timely risk mitigation measures.
  3. Decision Making: The watchlist enables lenders to make informed decisions about asset management, loan restructuring, or potential loan sales based on delinquency trends.
  4. Portfolio Diversification: By analyzing delinquencies across different property types, geographic locations, and asset classes, investors can make more informed decisions about portfolio diversification.
  5. Market Insights: Delinquency watchlists offer valuable insights into market trends and economic conditions, as high delinquency rates can signal broader economic challenges.
  6. Mitigating Losses: Early identification of delinquencies allows lenders and investors to take appropriate actions to mitigate potential losses, such as initiating foreclosure or loan workouts.
  7. Loan Servicing: For loan servicers, a delinquency watchlist helps in managing collections and guiding borrowers back to compliance.
  8. Compliance and Reporting: It assists financial institutions in adhering to regulatory requirements and reporting delinquency rates accurately.
  9. Real Estate Market Monitoring: By tracking delinquencies across different property types and regions, real estate professionals can gain insights into emerging market trends and potential investment opportunities.
  10. Asset Valuation: Delinquency information can impact the valuation of commercial mortgage-backed securities (CMBS) and other real estate investment products.

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 Names Harry Blanchard as Head of Data and Analytics

By
Michael Haas
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0
Former Moody’s Executive Harry Blanchard joins tech-focused CRE data firm, CRED iQ as Head of Data & Analytics

NEW YORK and PHILADELPHIA:  CRED iQ, the fastest growing provider of commercial real estate (CRE) data, analytics and valuation tools is pleased to announce that Harry Blanchard has joined the company as Managing Director, and Head of Data & Analytics. 

Read the official press release here

Harry comes to CRED iQ with a track record of impeccable leadership and executional excellence. His unique experience covers buy-side, sell-side, regulatory, compliance and banking. Harry has served in leadership roles at Moody’s, MetLife and Wells Fargo during his career, and has exceptional knowledge of CRE financial data and analytics. 

“We are thrilled to welcome Harry to the CRED iQ leadership team,” said Mike Haas, Co-Founder and CEO. “Harry’s multi-faceted experience and leadership skills are vital to our future, and I am pumped to watch him help shape our business.”

“I am delighted to be part of the CRED iQ team!  said Harry Blanchard “CRED iQ’s platform delivers exactly what CRE professionals need most: precise data, an efficient experience with multiple perspectives, and powerful valuation and risk tools. I am excited to contribute to this extraordinary platform and help make CRED iQ a must-have for all CRE professionals.”

“Harry understands how to serve clients, and then distill those insights into product strategy” noted Chris Aronson, CRED iQ’s Chief Commercial Officer. “As I learned firsthand, he is also a tremendous teammate. I am thrilled to have him join the CRED iQ family.” 

Harry will operate out of CRED iQ’s New York City offices set to open in the Fall –joining a growing leadership team based in Manhattan.

About CRED iQ

Try CRED iQ For Free

CRED iQ is a commercial real estate data, analytics, and valuation platform providing actionable intelligence to CRE and capital markets investors lenders and advisors.

Powered by over $2.0 trillion in transactions and data CRED iQ provides actionable data to commercial real estate lenders, brokers, and investors. CRED iQ’s customers use the platform to identify and evaluate opportunities for leasing, lending, refinancing, distressed debt, and acquisition opportunities.

Valuation Trends in the First Half of 2023

By
CRED iQ
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0

CRED iQ examined 190 appraisals of major properties across all assets classes to determine the impact of current market conditions on asset values. 

The most notable declines in valuation were dominated by retail and office properties.  Some key takeaways:

  • Across $ 10 billion in assets CRED iQ noted an average of 41.2% decline in valuation from the original appraised value.
  • By segment, retail properties experienced the highest decline in value at 57% led by several large malls.
  • The office sector was close behind with an average valuation decline of 48.7%
  • Self-Storage remained robust with no properties reporting a decline in valuation from specially serviced assets.
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Here are the most notable properties that made our list:

229 West 43rd Street, New York City

This 248,457 square foot retail condo in Times Square topped our list with a jaw dropping $386 million valuation decline.  

Gas Company Tower, Los Angels CA

This massive 1,377,053-sf office tower came in a close second on our list.  Originally valued at $632 million the current value is $270 million–a decline of $362 million. 

Average Drop in Valuations for Specially Serviced Loans during the first 6-months of 2023. Source: CRED-iQ.com

Woodbridge Center, Woodbridge NJ

This regional mall spanning 1.1 million square feet saw their valuation decrease by $366 million to $86 million (76.5%) earning them the number three spot. 

Wells Fargo Center, Denver

This 1.2 million square foot office tower in Upper Downtown Denver dropped $188 million in value which ranked them fifth on our list. 

JW Marriott, Chicago

The only non-retail or office property that made our Top 10 was this 610-room hotel in the Chicago Loop area that experienced a $136 million decline.  

Overall, the analysis highlights the need for continued monitoring of real estate assets and their exposure to changing market conditions. The appraisals were based on sales and leasing data from CRED iQ, and other reliable sources. In conclusion, the current market conditions are having a significant impact on the valuation of commercial real estate properties across all asset classes. Retail and office properties are being hit the hardest while self-storage remains resilient. It is crucial to continuously monitor real estate assets and their exposure to changing market conditions.

About CRED iQ

CRED iQ is a commercial real estate data, analytics, and valuation platform designed to unlock investment, financing, and leasing opportunities. CRED iQ provides real-time property, loan, tenant, ownership, and valuation data for over $2.0 trillion of commercial real estate.

Distressed Commercial Real Estate Loan Workouts and Payoffs – June 2023

By
CRED iQ
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0

CMBS transactions incurred approximately $41 million in realized losses during June 2023 via the workouts of distressed assets. CRED iQ identified 14 workouts classified as dispositions, liquidations, or discounted payoffs in June 2023. Of the 14 workouts, five were resolved without a principal loss. Of the nine workouts resulting in losses, severities for the month of June ranged from 1% to 90%, based on outstanding balances at disposition. Aggregate realized losses in June 2023 were more than 5x higher than May 2023 due, in part, to a higher volume of distressed workouts including two notable retail workouts. The aggregate realized loss total of $40.7 million was lower than the average aggregate monthly CMBS loss total for the trailing 12 months, which was equal to approximately $101 million.

By property type, workouts were concentrated in lodging and retail. Lodging workouts accounted for five of the 14 distressed resolutions in June 2023 and retail workouts accounted for four distressed workouts. Distressed workouts for retail properties had the highest total of aggregate realized losses ($25 million) by property type, which accounted for 60% of the total for the month. Distressed lodging workouts had the second-highest total of aggregate losses by property type with $11.1 million, or 27% of the total.

The two largest individual losses were associated with REO retail properties. First, the Romeoville Towne Center, a 108,242-SF community center located 40 miles southwest of Chicago, IL, liquidated with a $13.4 million loss. Outstanding debt at the time of disposition totaled $17.1 million, equal to a 78% loss severity. The property had been REO since February 2019 and had been in special servicing since 2014. Second, a 155,309-SF big-box retail outparcel of the Potomac Mills Mall in Woodbridge, VA known as Square 95, was liquidated with a $10.1 million loss. Outstanding debt on the property totaled $22.1 million prior to disposition, equal to a 46% loss severity.

The largest individual loss severity involved a suburban Chicago office property, 2250 Point Boulevard. The 80,978-SF office building transferred to special servicing in July 2020 and became REO in November 2021. Outstanding debt prior to disposition totaled $5.5 million and the liquidation resulted in a realized loss of $5 million, equal to a 90% severity.

The largest workout by outstanding balance was a $220 million mortgage secured by 693 Fifth Avenue, a 96,514-SF mixed-use (retail/office) property located in Midtown Manhattan, NY. Prior to the loan’s transfer to special servicing in May 2022, the property primarily generated revenue from its retail component, including ground-floor space formerly leased to Valentino. The retail space was backfilled by Burberry in April 2023 and the loan was paid off in June 2023 without incurring a principal loss.

Excluding defeased loans, there was approximately $5.2 billion in securitized debt among CMBS conduit, and Single-Borrower Large-Loan securitizations that was paid off or liquidated in June 2023, which was approximately a 53% increase compared to $3.4 billion in May 2023. In June, 2% of the loan resolutions were categorized as dispositions, liquidations, or discounted payoffs, which was in line with the prior month. Loan prepayment remained subdued in June — approximately 8% of the loans were paid off with prepayment penalties.

Retail had the highest total of outstanding debt payoff by property type in June with approximately 30% of the total by balance. Lodging had the next highest percentage of outstanding debt payoff with 25% of the total. The $540 million loan secured by the Miracle Mile Shops retail complex in Las Vegas, NV was among the largest mortgages to pay off in June 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-June-2023-Distressed-Workouts-and-PayoffsDownload

Commercial Real Estate Market Delinquency Tracker – June 2023

By
CRED iQ
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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 June 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, there were 35 markets that exhibited month-over-month increases in the percentages of distressed CRE loans, equal to 70% of the Top 50 markets. Of the markets with comparatively higher levels of CRE distress to the prior month, the average increase was approximately 61 basis points. Notable markets with the largest increases in distress included Minneapolis (+10.6%), Washington, DC (+2.5%), and Charlotte (+2.0%). The sharp increase in CRE distress for the Minneapolis market further separates the MSA as an outlier for distressed commercial real estate properties. The Minneapolis MSA has the highest percentage of distressed CRE loans among the Top 50 markets, equal to 33.6%. CRE distress in Minneapolis is nearly 3x higher than Chicago (11.5%), which has the second-highest level of distress among the Top 50 markets.

Of the 15 markets that exhibited month-over-month improvements in distressed rates, St. Louis (-2.7%) and Pittsburgh (-1.3%) had the sharpest declines. The distressed rate for the St. Louis MSA improved substantially after a $155 million mortgage secured by West County Center was modified with a two-year maturity extension. West County Center is a 743,945-SF regional mall located in Des Peres, MO and its mortgage failed to pay off at maturity in December 2022. The loan was paid current as part of the modification. The St. Louis MSA, and more specifically the St. Louis – Retail market-sector, had the largest declines in distress among the markets and sectors monitored by CRED iQ.

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 office and mixed-use sectors exhibited continued volatility, accounting for six of the 10 largest increases in distress by market-sector. Washington, DC-Office (+10.6%), St. Louis-Office (+10.3%), and Chicago-Office (+5.6%) were among the market-sectors with the sharpest month-over-month increases in CRE distress. The Chicago-Office market-sector alone had more than $450 million in newly distressed CMBS loans as of June 2023, including the special servicing transfer of a $310 million mortgage secured by River North Point, a 1.3 million-SF office property located in Chicago’s Central Business District. Suburban Chicago office properties also transferred to special servicing due to credit issues — a $56 million loan secured by the 869,120-SF Riverway office complex and a $26 million mortgage secured by 9525 West Bryn Mawr Avenue, a 246,841-SF office building, both transferred to special servicing in May 2023. These suburban office properties are located in Rosemont, IL, approximately 20 miles northwest of Chicago. The Chicago MSA is the fourth-largest office market, based on aggregate outstanding securitized debt, monitored by CRED iQ.

The market-sector with highest month-over-month increase in distress was Charlotte-Retail, which saw its distressed rate surge to 24.5% of outstanding debt that is delinquent or specially serviced. A $151  million mortgage secured by 647,511 SF of the Carolina Place Mall in Pineville, NC defaulted at its maturity in June 2023 and transferred to special servicing.

In summary, the Minneapolis MSA has the highest overall distressed rate — equal to 33.6% — and has maintained this position for over a year. Chicago (11.5%), Milwaukee (9.9%), Cleveland (9.8%), and Birmingham, AL (8.8%) comprise the remaining markets with the highest rates of distress. The Salt Lake City MSA (0.0%) has the lowest level of distress among the Top 50 MSAs for the second consecutive month.

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$76.52.4%-0.1%
Allentown – Hotel$0.00.0%0.0%
Allentown – Industrial$0.00.0%0.0%
Allentown – Multifamily$0.00.0%0.0%
Allentown – Office$57.618.5%0.0%
Allentown – Other$0.00.0%0.0%
Allentown – Retail$18.85.1%0.0%
Allentown – Self Storage$0.00.0%0.0%
Atlanta-Sandy Springs-Marietta, GA MSA$528.01.9%-0.1%
Atlanta – Hotel$80.83.2%0.0%
Atlanta – Industrial$0.00.0%0.0%
Atlanta – Multifamily$2.50.0%0.0%
Atlanta – Office$414.419.8%0.7%
Atlanta – Other$0.00.0%0.0%
Atlanta – Retail$30.31.9%-0.8%
Atlanta – Self Storage$0.00.0%0.0%
Austin-Round Rock, TX MSA$107.21.1%0.2%
Austin – Hotel$69.37.7%1.4%
Austin – Industrial$0.00.0%0.0%
Austin – Multifamily$0.00.0%0.0%
Austin – Office$0.00.0%0.0%
Austin – Other$4.11.3%0.0%
Austin – Retail$33.84.5%0.0%
Austin – Self Storage$0.00.0%0.0%
Baltimore-Towson, MD MSA$393.84.1%0.0%
Baltimore – Hotel$65.214.4%0.3%
Baltimore – Industrial$0.00.0%0.0%
Baltimore – Multifamily$5.10.1%0.0%
Baltimore – Office$65.57.4%-0.2%
Baltimore – Other$11.45.5%0.0%
Baltimore – Retail$246.523.4%0.1%
Baltimore – Self Storage$0.00.0%0.0%
Birmingham-Hoover, AL MSA$267.98.8%0.1%
Birmingham – Hotel$10.37.6%0.0%
Birmingham – Industrial$0.00.0%0.0%
Birmingham – Multifamily$0.00.0%0.0%
Birmingham – Office$93.420.1%0.3%
Birmingham – Other$0.00.0%0.0%
Birmingham – Retail$164.223.6%0.7%
Birmingham – Self Storage$0.00.0%0.0%
Boston-Cambridge-Quincy, MA-NH MSA$156.70.8%0.0%
Boston – Hotel$19.31.2%-0.1%
Boston – Industrial$0.00.0%0.0%
Boston – Multifamily$0.00.0%0.0%
Boston – Office$49.30.7%0.0%
Boston – Other$0.00.0%0.0%
Boston – Retail$88.18.0%2.4%
Boston – Self Storage$0.00.0%0.0%
Bridgeport-Stamford-Norwalk, CT MSA$196.94.7%0.0%
Bridgeport – Hotel$37.220.3%-3.2%
Bridgeport – Industrial$17.814.2%0.0%
Bridgeport – Multifamily$0.00.0%0.0%
Bridgeport – Office$132.111.1%0.0%
Bridgeport – Other$9.83.3%-0.1%
Bridgeport – Retail$0.00.0%0.0%
Bridgeport – Self Storage$0.00.0%0.0%
Charlotte-Gastonia-Concord, NC-SC MSA$657.78.6%2.0%
Charlotte – Hotel$47.05.4%0.1%
Charlotte – Industrial$0.00.0%0.0%
Charlotte – Multifamily$0.00.0%0.0%
Charlotte – Office$276.329.3%-1.8%
Charlotte – Other$100.329.5%0.5%
Charlotte – Retail$234.224.5%16.1%
Charlotte – Self Storage$0.00.0%0.0%
Chicago-Naperville-Joliet, IL-IN-WI MSA$3,340.711.5%1.5%
Chicago – Hotel$738.539.3%-0.9%
Chicago – Industrial$8.60.2%0.0%
Chicago – Multifamily$85.60.9%0.0%
Chicago – Office$2,021.524.4%5.6%
Chicago – Other$215.68.6%0.2%
Chicago – Retail$270.98.8%-0.9%
Chicago – Self Storage$0.00.0%0.0%
Cincinnati-Middletown, OH-KY-IN MSA$189.74.9%0.1%
Cincinnati – Hotel$86.230.1%-0.8%
Cincinnati – Industrial$0.00.0%0.0%
Cincinnati – Multifamily$0.00.0%0.0%
Cincinnati – Office$58.512.9%1.0%
Cincinnati – Other$6.73.5%0.8%
Cincinnati – Retail$38.37.3%-0.8%
Cincinnati – Self Storage$0.00.0%0.0%
Cleveland-Elyria-Mentor, OH MSA$417.39.8%-0.5%
Cleveland – Hotel$84.248.7%-0.1%
Cleveland – Industrial$0.00.0%0.0%
Cleveland – Multifamily$0.00.0%0.0%
Cleveland – Office$145.215.9%-2.2%
Cleveland – Other$180.445.4%0.0%
Cleveland – Retail$7.61.1%0.0%
Cleveland – Self Storage$0.00.0%0.0%
Columbus, OH MSA$194.83.2%0.0%
Columbus, OH – Hotel$18.17.4%0.4%
Columbus, OH – Industrial$0.00.0%0.0%
Columbus, OH – Multifamily$5.70.1%0.0%
Columbus, OH – Office$57.18.8%0.4%
Columbus, OH – Other$0.00.0%0.0%
Columbus, OH – Retail$114.013.7%0.0%
Columbus, OH – Self Storage$0.00.0%0.0%
Dallas-Fort Worth-Arlington, TX MSA$326.10.9%0.0%
Dallas – Hotel$118.83.4%0.0%
Dallas – Industrial$0.00.0%0.0%
Dallas – Multifamily$10.50.0%0.0%
Dallas – Office$143.44.7%0.0%
Dallas – Other$10.20.5%0.0%
Dallas – Retail$43.22.2%0.1%
Dallas – Self Storage$0.00.0%0.0%
Denver-Aurora, CO MSA$848.25.4%0.0%
Denver – Hotel$17.22.0%-0.1%
Denver – Industrial$0.00.0%0.0%
Denver – Multifamily$0.00.0%0.0%
Denver – Office$691.033.1%0.4%
Denver – Other$93.810.6%0.7%
Denver – Retail$46.23.6%0.2%
Denver – Self Storage$0.00.0%0.0%
Detroit-Warren-Livonia, MI MSA$252.82.4%0.0%
Detroit – Hotel$83.712.9%0.1%
Detroit – Industrial$18.82.9%0.0%
Detroit – Multifamily$1.20.0%0.0%
Detroit – Office$3.70.2%0.0%
Detroit – Other$0.00.0%0.0%
Detroit – Retail$145.49.8%-0.2%
Detroit – Self Storage$0.00.0%0.0%
Hartford-West Hartford-East Hartford, CT MSA$197.68.1%0.2%
Hartford – Hotel$0.00.0%0.0%
Hartford – Industrial$0.00.0%0.0%
Hartford – Multifamily$1.00.1%0.1%
Hartford – Office$71.526.5%0.0%
Hartford – Other$0.00.0%0.0%
Hartford – Retail$125.141.5%2.8%
Hartford – Self Storage$0.00.0%0.0%
Houston-Sugar Land-Baytown, TX MSA$1,270.24.9%0.7%
Houston – Hotel$426.447.1%3.6%
Houston – Industrial$32.73.5%0.0%
Houston – Multifamily$104.30.7%0.5%
Houston – Office$576.117.0%2.6%
Houston – Other$87.314.9%0.0%
Houston – Retail$43.41.1%0.0%
Houston – Self Storage$0.00.0%0.0%
Indianapolis-Carmel, IN MSA$126.12.3%0.0%
Indianapolis – Hotel$42.17.9%0.2%
Indianapolis – Industrial$0.00.0%0.0%
Indianapolis – Multifamily$9.70.3%0.0%
Indianapolis – Office$59.610.4%0.8%
Indianapolis – Other$0.00.0%0.0%
Indianapolis – Retail$14.84.3%0.0%
Indianapolis – Self Storage$0.00.0%0.0%
Jacksonville, FL MSA$174.33.3%0.0%
Jacksonville – Hotel$24.46.2%0.2%
Jacksonville – Industrial$0.00.0%0.0%
Jacksonville – Multifamily$0.00.0%0.0%
Jacksonville – Office$38.16.7%-0.2%
Jacksonville – Other$0.00.0%0.0%
Jacksonville – Retail$111.933.7%4.4%
Jacksonville – Self Storage$0.00.0%0.0%
Kansas City, MO-KS MSA$332.25.8%0.1%
Kansas City – Hotel$28.112.2%0.0%
Kansas City – Industrial$0.00.0%0.0%
Kansas City – Multifamily$2.50.1%0.0%
Kansas City – Office$232.521.9%1.0%
Kansas City – Other$20.810.3%-0.2%
Kansas City – Retail$48.48.7%2.9%
Kansas City – Self Storage$0.00.0%0.0%
Las Vegas-Paradise, NV MSA$407.11.8%-0.8%
Las Vegas – Hotel$30.30.3%0.0%
Las Vegas – Industrial$0.00.0%0.0%
Las Vegas – Multifamily$0.00.0%0.0%
Las Vegas – Office$0.00.0%0.0%
Las Vegas – Other$130.023.6%-17.6%
Las Vegas – Retail$246.77.1%0.3%
Las Vegas – Self Storage$0.00.0%0.0%
Los Angeles-Long Beach-Santa Ana, CA MSA$2,264.84.4%0.1%
Los Angeles – Hotel$164.93.3%0.3%
Los Angeles – Industrial$0.00.0%0.0%
Los Angeles – Multifamily$31.70.2%0.1%
Los Angeles – Office$1,118.59.1%0.0%
Los Angeles – Other$53.31.6%-0.5%
Los Angeles – Retail$896.414.5%-0.2%
Los Angeles – Self Storage$0.00.0%0.0%
Louisville/Jefferson County, KY-IN MSA$22.00.7%0.0%
Louisville – Hotel$0.00.0%0.0%
Louisville – Industrial$0.00.0%0.0%
Louisville – Multifamily$6.90.5%0.0%
Louisville – Office$0.00.0%0.0%
Louisville – Other$0.00.0%0.0%
Louisville – Retail$15.13.5%0.5%
Louisville – Self Storage$0.00.0%0.0%
Memphis, TN-AR-MS MSA$87.73.7%0.0%
Memphis – Hotel$22.510.7%0.2%
Memphis – Industrial$0.00.0%0.0%
Memphis – Multifamily$0.00.0%0.0%
Memphis – Office$0.00.0%0.0%
Memphis – Other$5.314.7%0.0%
Memphis – Retail$59.916.0%-0.8%
Memphis – Self Storage$0.00.0%0.0%
Miami-Fort Lauderdale-Pompano Beach, FL MSA$404.21.6%0.2%
Miami – Hotel$59.61.1%0.0%
Miami – Industrial$0.00.0%0.0%
Miami – Multifamily$0.00.0%0.0%
Miami – Office$98.33.7%2.0%
Miami – Other$0.00.0%0.0%
Miami – Retail$246.24.5%0.0%
Miami – Self Storage$0.00.0%0.0%
Milwaukee-Waukesha-West Allis, WI MSA$238.79.9%-0.2%
Milwaukee – Hotel$16.510.3%0.0%
Milwaukee – Industrial$0.00.0%0.0%
Milwaukee – Multifamily$0.00.0%0.0%
Milwaukee – Office$117.421.6%-1.2%
Milwaukee – Other$0.00.0%0.0%
Milwaukee – Retail$104.924.0%-0.3%
Milwaukee – Self Storage$0.00.0%0.0%
Minneapolis-St. Paul-Bloomington, MN-WI MSA$2,833.433.6%10.6%
Minneapolis – Hotel$258.744.6%-1.4%
Minneapolis – Industrial$2.60.5%0.5%
Minneapolis – Multifamily$9.80.3%0.0%
Minneapolis – Office$989.147.4%43.6%
Minneapolis – Other$173.235.1%1.6%
Minneapolis – Retail$1,400.074.5%0.0%
Minneapolis – Self Storage$0.00.0%0.0%
Nashville-Davidson-Murfreesboro-Franklin, TN MSA$54.40.9%-0.1%
Nashville – Hotel$51.33.5%0.1%
Nashville – Industrial$0.00.0%0.0%
Nashville – Multifamily$0.00.0%0.0%
Nashville – Office$0.00.0%0.0%
Nashville – Other$0.00.0%0.0%
Nashville – Retail$3.10.4%-0.5%
Nashville – Self Storage$0.00.0%0.0%
New Orleans-Metairie-Kenner, LA MSA$118.13.4%0.1%
New Orleans – Hotel$56.54.8%-0.5%
New Orleans – Industrial$0.00.0%0.0%
New Orleans – Multifamily$14.41.8%0.5%
New Orleans – Office$26.95.2%0.0%
New Orleans – Other$14.69.6%0.0%
New Orleans – Retail$5.60.9%0.0%
New Orleans – Self Storage$0.00.0%0.0%
New York-Northern New Jersey-Long Island, NY-NJ-PA MSA$8,519.96.6%0.3%
New York City – Hotel$934.424.4%0.8%
New York City – Industrial$120.02.8%-0.1%
New York City – Multifamily$1,404.73.9%0.8%
New York City – Office$2,064.24.4%1.0%
New York City – Other$1,833.48.1%0.0%
New York City – Retail$2,163.217.4%-2.9%
New York City – Self Storage$0.00.0%0.0%
Orlando-Kissimmee, FL MSA$102.71.0%0.0%
Orlando – Hotel$13.50.5%0.0%
Orlando – Industrial$0.00.0%0.0%
Orlando – Multifamily$0.00.0%0.0%
Orlando – Office$61.011.5%0.0%
Orlando – Other$0.00.0%0.0%
Orlando – Retail$28.23.2%0.0%
Orlando – Self Storage$0.00.0%0.0%
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA$1,201.35.8%0.7%
Philadelphia – Hotel$117.013.8%0.1%
Philadelphia – Industrial$18.50.6%0.3%
Philadelphia – Multifamily$54.90.6%0.0%
Philadelphia – Office$530.613.8%2.6%
Philadelphia – Other$439.435.4%2.3%
Philadelphia – Retail$41.11.9%0.5%
Philadelphia – Self Storage$0.00.0%0.0%
Phoenix-Mesa-Scottsdale, AZ MSA$297.81.5%0.2%
Phoenix – Hotel$54.13.0%-0.1%
Phoenix – Industrial$3.00.3%0.3%
Phoenix – Multifamily$0.00.0%0.0%
Phoenix – Office$79.93.6%1.3%
Phoenix – Other$26.92.9%0.8%
Phoenix – Retail$133.86.2%0.1%
Phoenix – Self Storage$0.00.0%0.0%
Pittsburgh, PA MSA$236.35.2%-1.2%
Pittsburgh – Hotel$8.24.8%0.0%
Pittsburgh – Industrial$0.00.0%0.0%
Pittsburgh – Multifamily$21.91.0%-1.3%
Pittsburgh – Office$88.78.1%-2.0%
Pittsburgh – Other$104.830.0%-3.0%
Pittsburgh – Retail$12.72.6%0.0%
Pittsburgh – Self Storage$0.00.0%0.0%
Portland-Vancouver-Beaverton, OR-WA MSA$356.74.1%0.4%
Portland – Hotel$295.633.2%-0.1%
Portland – Industrial$0.00.0%0.0%
Portland – Multifamily$38.10.9%0.9%
Portland – Office$12.82.7%-3.8%
Portland – Other$10.12.1%2.1%
Portland – Retail$0.00.0%0.0%
Portland – Self Storage$0.00.0%0.0%
Raleigh-Cary, NC MSA$21.80.6%0.0%
Raleigh – Hotel$15.35.8%-0.2%
Raleigh – Industrial$0.00.0%0.0%
Raleigh – Multifamily$0.00.0%0.0%
Raleigh – Office$0.00.0%0.0%
Raleigh – Other$6.64.1%0.5%
Raleigh – Retail$0.00.0%0.0%
Raleigh – Self Storage$0.00.0%0.0%
Richmond, VA MSA$153.84.8%0.1%
Richmond – Hotel$0.00.0%0.0%
Richmond – Industrial$0.00.0%0.0%
Richmond – Multifamily$0.00.0%0.0%
Richmond – Office$0.00.0%0.0%
Richmond – Other$10.47.3%-1.6%
Richmond – Retail$143.432.8%1.2%
Richmond – Self Storage$0.00.0%0.0%
Riverside-San Bernardino-Ontario, CA MSA$283.82.4%0.0%
Riverside – Hotel$29.56.2%-0.2%
Riverside – Industrial$0.00.0%0.0%
Riverside – Multifamily$1.40.0%0.0%
Riverside – Office$0.00.0%0.0%
Riverside – Other$0.00.0%0.0%
Riverside – Retail$252.913.0%0.4%
Riverside – Self Storage$0.00.0%0.0%
Sacramento-Arden-Arcade-Roseville, CA MSA$25.00.5%0.2%
Sacramento – Hotel$0.00.0%0.0%
Sacramento – Industrial$0.00.0%0.0%
Sacramento – Multifamily$0.00.0%0.0%
Sacramento – Office$14.21.8%1.0%
Sacramento – Other$10.82.8%-0.2%
Sacramento – Retail$0.00.0%0.0%
Sacramento – Self Storage$0.00.0%0.0%
Salt Lake City, UT MSA$0.00.0%-0.1%
Salt Lake City – Hotel$0.00.0%-1.9%
Salt Lake City – Industrial$0.00.0%0.0%
Salt Lake City – Multifamily$0.00.0%0.0%
Salt Lake City – Office$0.00.0%0.0%
Salt Lake City – Other$0.00.0%0.0%
Salt Lake City – Retail$0.00.0%0.0%
Salt Lake City – Self Storage$0.00.0%0.0%
San Antonio, TX MSA$186.52.8%0.0%
San Antonio – Hotel$16.45.0%-1.3%
San Antonio – Industrial$0.00.0%0.0%
San Antonio – Multifamily$0.00.0%0.0%
San Antonio – Office$56.114.1%0.9%
San Antonio – Other$0.00.0%0.0%
San Antonio – Retail$114.014.7%-0.1%
San Antonio – Self Storage$0.00.0%0.0%
San Diego-Carlsbad-San Marcos, CA MSA$63.50.6%0.0%
San Diego – Hotel$56.64.4%1.5%
San Diego – Industrial$0.00.0%0.0%
San Diego – Multifamily$4.10.1%0.0%
San Diego – Office$0.00.0%0.0%
San Diego – Other$0.00.0%0.0%
San Diego – Retail$2.90.2%0.0%
San Diego – Self Storage$0.00.0%0.0%
San Francisco-Oakland-Fremont, CA MSA$1,291.24.9%0.0%
San Francisco – Hotel$209.47.1%0.0%
San Francisco – Industrial$0.00.0%0.0%
San Francisco – Multifamily$450.85.6%0.0%
San Francisco – Office$458.04.5%0.1%
San Francisco – Other$135.34.3%-0.2%
San Francisco – Retail$37.83.4%-1.5%
San Francisco – Self Storage$0.00.0%0.0%
San Jose-Sunnyvale-Santa Clara, CA MSA$198.71.0%0.3%
San Jose – Hotel$35.00.5%0.0%
San Jose – Industrial$0.00.0%0.0%
San Jose – Multifamily$6.40.2%0.0%
San Jose – Office$157.42.0%0.6%
San Jose – Other$0.00.0%0.0%
San Jose – Retail$0.00.0%0.0%
San Jose – Self Storage$0.00.0%0.0%
Seattle-Tacoma-Bellevue, WA MSA$110.00.5%0.2%
Seattle – Hotel$35.72.6%0.0%
Seattle – Industrial$0.00.0%0.0%
Seattle – Multifamily$51.90.7%0.7%
Seattle – Office$0.00.0%0.0%
Seattle – Other$22.41.4%0.0%
Seattle – Retail$0.00.0%0.0%
Seattle – Self Storage$0.00.0%0.0%
St. Louis, MO-IL MSA$108.72.6%-2.7%
St. Louis – Hotel$1.70.5%0.0%
St. Louis – Industrial$0.00.0%0.0%
St. Louis – Multifamily$3.20.2%0.0%
St. Louis – Office$61.614.1%10.2%
St. Louis – Other$13.92.9%0.1%
St. Louis – Retail$28.33.2%-17.0%
St. Louis – Self Storage$0.00.0%0.0%
Tampa-St. Petersburg-Clearwater, FL MSA$210.31.9%0.5%
Tampa – Hotel$58.87.8%-0.3%
Tampa – Industrial$7.02.9%2.9%
Tampa – Multifamily$1.20.0%0.0%
Tampa – Office$59.48.0%3.1%
Tampa – Other$42.912.9%6.5%
Tampa – Retail$41.06.2%0.2%
Tampa – Self Storage$0.00.0%0.0%
Tucson, AZ MSA$155.74.6%0.1%
Tucson – Hotel$0.00.0%0.0%
Tucson – Industrial$0.00.0%0.0%
Tucson – Multifamily$0.00.0%0.0%
Tucson – Office$0.00.0%0.0%
Tucson – Other$0.00.0%0.0%
Tucson – Retail$155.719.4%-0.7%
Tucson – Self Storage$0.00.0%0.0%
Virginia Beach-Norfolk-Newport News, VA-NC MSA$182.73.8%0.0%
Virginia Beach – Hotel$14.83.3%0.0%
Virginia Beach – Industrial$0.00.0%0.0%
Virginia Beach – Multifamily$0.00.0%0.0%
Virginia Beach – Office$0.00.0%0.0%
Virginia Beach – Other$4.43.5%0.0%
Virginia Beach – Retail$163.518.9%0.4%
Virginia Beach – Self Storage$0.00.0%0.0%
Washington-Arlington-Alexandria, DC-VA-MD-WV MSA$1,861.75.9%2.5%
Washington, DC – Hotel$40.63.6%-0.1%
Washington, DC – Industrial$0.00.0%0.0%
Washington, DC – Multifamily$0.00.0%0.0%
Washington, DC – Office$1,614.821.1%10.6%
Washington, DC – Other$63.54.9%-2.6%
Washington, DC – Retail$142.84.3%0.1%
Washington, DC – Self Storage$0.00.0%0.0%
Grand Total$32,053.54.5%0.6%

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-June-2023Download

June 2023 Delinquency Report

By
CRED iQ
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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 June 2023 increased for the fifth consecutive month to 4.40%. The delinquency rate was 20 basis points higher than the prior month’s rate of 4.20%, equal to a 5% increase. CMBS delinquency is at its highest level since the end of 2021. Over $4 billion in aggregate CMBS debt was reported as newly delinquency as of June 2023, and over 80% of newly delinquent loans by outstanding balance was attributed to maturity defaults or refinancing issues. 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 6.21%, from 6.01%. The special servicing rate has climbed in five out of six months so far in 2023. Aggregating the two indicators of distress – delinquency rate and special servicing rate – into an overall distressed rate (DQ + SS%) equals 6.56% of CMBS loans that are specially serviced, delinquent, or a combination of both. Last month’s distressed rate was equal to 6.43%, which was 13 basis points lower than the June 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.

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

By property type, distress in the office sector continued to build in June 2023. The office delinquency rate increased to 4.60%, which compared to 3.98% as of May 2023. The month-over-month surge of 62 basis points in office delinquency was equal to a 16% increase. Comparing data across the trailing 12 months, the delinquency rate for office is nearly 2.5X higher than July 2022. The natural progression of long to intermediate-term rolling leases coupled with ongoing refinancing difficulties at loan maturity have caused the velocity of new delinquencies to accelerate during the first half of 2023.

One of the largest contributors to the spike in office delinquency during June 2023 was the maturity default of a $691 million mortgage secured by a 2.1 million-SF office portfolio in Rosslyn, VA. In addition to the senior mortgage, financing for the Rosslyn Office Portfolio also included $150 million in mezzanine debt. The floating-rate loan transferred to special servicing shortly after its initial maturity date in May 2023. The loan was structured with three, one-year extension options but the borrower was constrained in its ability to execute an extension and refinancing was even less plausible.

The delinquency rate for lodging properties exhibited a similar one-month surge to the office sector. Hotel delinquency for June 2023 measured at 5.34%, up from 4.55% in May. The increase is June is attributed to several untimely maturity defaults, including Holiday Inn – 6th Avenue, a 226-key hotel in Manhattan, NY that secures a $72.8 million mortgage. The loan failed to pay off at maturity, but the borrower requested a two-year extension. Rounding out delinquency rates for remaining property types, retail delinquency (7.37%) declined from May to June. Multifamily delinquency (1.87%) and industrial delinquency (0.33%) were flat month over month while self-storage delinquency was negligible.

From the perspective of special servicing rates, distress in the office sector maintained position as the dominant theme. The office special servicing rate as of June 2023 was 7.95%, which represented a 31% increase from May 2023’s office special servicing rate of 6.08%. Maturity defaults and refinancing risk are forces that need to be worked though — both of these reasons were the primary citations for newly transferred office loans. A high-profile example included a $310 million mortgage secured by the 1.3 million-SF River North Point office property in Chicago, IL.

Aside from the office sector, the special servicing rate for retail loans declined to 9.95%, compared to 11.04% as of May 2023. The special servicing rate for loans secured by lodging properties (6.33%) also declined compared to May 2023. The special servicing rates for multifamily (4.31%) and industrial (0.47%) both exhibited month-over-month increases. 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 6.56%. The increase was 13 basis points higher than May’s distressed rate (6.43%), equal to a 2% increase. A severely limited refinancing market for office properties and a ‘higher for longer’ interest rate environment continue to contribute to sustained increases in commercial real estate distress.

For additional information about two of this month’s largest loans that became distressed, click View Details below:

[View Details][View Details]
LoanRiver North PointHoliday Inn – 6th Avenue
Balance$310 million$72.8 million
Special Servicer Transfer Date5/11/2023NAP

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-June-2023-Delinquency-ReportDownload

Commercial Real Estate Price Discovery via Auctions

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CRED iQ
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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-AuctionsDownload

Distressed Commercial Real Estate Loan Workouts and Payoffs – May 2023

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CRED iQ
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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-PayoffsDownload

Commercial Real Estate Market Delinquency Tracker – May 2023

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CRED iQ
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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$76.62.4%-0.2%
Allentown – Hotel$0.00.0%-3.1%
Allentown – Industrial$0.00.0%0.0%
Allentown – Multifamily$0.00.0%0.0%
Allentown – Office$57.718.5%0.0%
Allentown – Other$0.00.0%0.0%
Allentown – Retail$18.85.1%-0.1%
Allentown – Self Storage$0.00.0%0.0%
Atlanta-Sandy Springs-Marietta, GA MSA$567.02.1%-0.8%
Atlanta – Hotel$80.83.2%-0.4%
Atlanta – Industrial$0.00.0%0.0%
Atlanta – Multifamily$4.50.0%0.0%
Atlanta – Office$431.719.1%-1.3%
Atlanta – Other$0.00.0%0.0%
Atlanta – Retail$50.02.7%-4.4%
Atlanta – Self Storage$0.00.0%0.0%
Austin-Round Rock, TX MSA$89.81.0%-0.6%
Austin – Hotel$51.86.4%-1.5%
Austin – Industrial$0.00.0%0.0%
Austin – Multifamily$0.00.0%0.0%
Austin – Office$0.00.0%0.0%
Austin – Other$4.11.3%-0.6%
Austin – Retail$33.94.5%-1.9%
Austin – Self Storage$0.00.0%0.0%
Baltimore-Towson, MD MSA$394.24.1%-0.8%
Baltimore – Hotel$65.414.1%-0.2%
Baltimore – Industrial$0.00.0%0.0%
Baltimore – Multifamily$5.10.1%0.0%
Baltimore – Office$65.67.6%0.2%
Baltimore – Other$11.45.5%-1.2%
Baltimore – Retail$246.723.3%0.2%
Baltimore – Self Storage$0.00.0%0.0%
Birmingham-Hoover, AL MSA$268.18.7%-2.0%
Birmingham – Hotel$10.37.6%0.0%
Birmingham – Industrial$0.00.0%0.0%
Birmingham – Multifamily$0.00.0%0.0%
Birmingham – Office$93.619.7%-3.7%
Birmingham – Other$0.00.0%0.0%
Birmingham – Retail$164.223.0%-0.3%
Birmingham – Self Storage$0.00.0%0.0%
Boston-Cambridge-Quincy, MA-NH MSA$157.90.8%-0.1%
Boston – Hotel$19.31.2%0.1%
Boston – Industrial$0.00.0%0.0%
Boston – Multifamily$0.00.0%0.0%
Boston – Office$50.30.7%0.0%
Boston – Other$0.00.0%0.0%
Boston – Retail$88.45.6%0.4%
Boston – Self Storage$0.00.0%0.0%
Bridgeport-Stamford-Norwalk, CT MSA$197.34.7%1.0%
Bridgeport – Hotel$37.323.5%-2.4%
Bridgeport – Industrial$17.814.2%-4.4%
Bridgeport – Multifamily$0.00.0%0.0%
Bridgeport – Office$132.411.1%5.0%
Bridgeport – Other$9.83.4%1.2%
Bridgeport – Retail$0.00.0%0.0%
Bridgeport – Self Storage$0.00.0%0.0%
Charlotte-Gastonia-Concord, NC-SC MSA$507.36.6%-2.6%
Charlotte – Hotel$47.15.3%0.8%
Charlotte – Industrial$0.00.0%0.0%
Charlotte – Multifamily$0.00.0%0.0%
Charlotte – Office$276.531.0%-5.6%
Charlotte – Other$100.328.9%-1.6%
Charlotte – Retail$83.48.4%0.2%
Charlotte – Self Storage$0.00.0%0.0%
Chicago-Naperville-Joliet, IL-IN-WI MSA$2,890.510.0%-0.8%
Chicago – Hotel$738.840.2%-1.7%
Chicago – Industrial$8.60.2%0.2%
Chicago – Multifamily$82.80.9%0.1%
Chicago – Office$1,544.118.8%-0.7%
Chicago – Other$214.58.5%-0.2%
Chicago – Retail$301.89.7%2.4%
Chicago – Self Storage$0.00.0%0.0%
Cincinnati-Middletown, OH-KY-IN MSA$194.74.8%1.0%
Cincinnati – Hotel$86.330.9%-0.5%
Cincinnati – Industrial$0.00.0%0.0%
Cincinnati – Multifamily$0.00.0%0.0%
Cincinnati – Office$58.611.9%11.9%
Cincinnati – Other$6.82.7%-0.4%
Cincinnati – Retail$43.08.1%0.6%
Cincinnati – Self Storage$0.00.0%0.0%
Cleveland-Elyria-Mentor, OH MSA$436.810.3%0.9%
Cleveland – Hotel$84.348.7%-1.5%
Cleveland – Industrial$0.00.0%0.0%
Cleveland – Multifamily$0.00.0%0.0%
Cleveland – Office$164.218.1%8.2%
Cleveland – Other$180.745.4%1.7%
Cleveland – Retail$7.61.1%0.0%
Cleveland – Self Storage$0.00.0%0.0%
Columbus, OH MSA$195.23.1%-0.3%
Columbus, OH – Hotel$18.17.0%0.0%
Columbus, OH – Industrial$0.00.0%0.0%
Columbus, OH – Multifamily$5.70.1%0.1%
Columbus, OH – Office$57.28.5%0.2%
Columbus, OH – Other$0.00.0%0.0%
Columbus, OH – Retail$114.213.8%0.6%
Columbus, OH – Self Storage$0.00.0%0.0%
Dallas-Fort Worth-Arlington, TX MSA$315.20.9%-0.2%
Dallas – Hotel$118.53.4%-0.2%
Dallas – Industrial$0.00.0%0.0%
Dallas – Multifamily$3.60.0%0.0%
Dallas – Office$143.74.7%0.2%
Dallas – Other$10.20.5%0.2%
Dallas – Retail$39.32.1%-0.1%
Dallas – Self Storage$0.00.0%0.0%
Denver-Aurora, CO MSA$853.75.4%-0.9%
Denver – Hotel$17.22.0%-0.1%
Denver – Industrial$0.00.0%0.0%
Denver – Multifamily$0.00.0%0.0%
Denver – Office$696.432.6%0.5%
Denver – Other$93.99.9%5.6%
Denver – Retail$46.23.4%0.2%
Denver – Self Storage$0.00.0%0.0%
Detroit-Warren-Livonia, MI MSA$253.12.4%-0.3%
Detroit – Hotel$83.812.8%0.1%
Detroit – Industrial$18.82.9%0.0%
Detroit – Multifamily$1.20.0%0.0%
Detroit – Office$3.70.2%-0.6%
Detroit – Other$0.00.0%0.0%
Detroit – Retail$145.610.0%0.3%
Detroit – Self Storage$0.00.0%0.0%
Hartford-West Hartford-East Hartford, CT MSA$196.97.9%0.6%
Hartford – Hotel$0.00.0%-3.5%
Hartford – Industrial$0.00.0%0.0%
Hartford – Multifamily$0.00.0%0.0%
Hartford – Office$71.526.6%17.8%
Hartford – Other$0.00.0%0.0%
Hartford – Retail$125.438.7%-4.5%
Hartford – Self Storage$0.00.0%0.0%
Houston-Sugar Land-Baytown, TX MSA$1,086.44.2%-1.6%
Houston – Hotel$389.943.5%-2.9%
Houston – Industrial$32.73.5%-1.8%
Houston – Multifamily$27.90.2%0.1%
Houston – Office$505.014.4%-3.6%
Houston – Other$87.414.9%-2.4%
Houston – Retail$43.51.1%0.6%
Houston – Self Storage$0.00.0%0.0%
Indianapolis-Carmel, IN MSA$126.22.2%-1.2%
Indianapolis – Hotel$42.17.7%-8.8%
Indianapolis – Industrial$0.00.0%0.0%
Indianapolis – Multifamily$9.70.3%0.3%
Indianapolis – Office$59.79.6%0.3%
Indianapolis – Other$0.00.0%0.0%
Indianapolis – Retail$14.84.3%0.5%
Indianapolis – Self Storage$0.00.0%0.0%
Jacksonville, FL MSA$174.43.4%-0.7%
Jacksonville – Hotel$24.46.0%-0.2%
Jacksonville – Industrial$0.00.0%0.0%
Jacksonville – Multifamily$0.00.0%0.0%
Jacksonville – Office$38.16.9%0.1%
Jacksonville – Other$0.00.0%0.0%
Jacksonville – Retail$111.829.3%3.9%
Jacksonville – Self Storage$0.00.0%0.0%
Kansas City, MO-KS MSA$316.15.7%3.6%
Kansas City – Hotel$28.112.2%-0.3%
Kansas City – Industrial$0.00.0%0.0%
Kansas City – Multifamily$2.50.1%0.0%
Kansas City – Office$232.521.0%21.0%
Kansas City – Other$20.810.5%-1.0%
Kansas City – Retail$32.15.9%-2.6%
Kansas City – Self Storage$0.00.0%0.0%
Las Vegas-Paradise, NV MSA$602.72.6%-0.1%
Las Vegas – Hotel$30.30.3%0.1%
Las Vegas – Industrial$0.00.0%0.0%
Las Vegas – Multifamily$0.00.0%0.0%
Las Vegas – Office$0.00.0%0.0%
Las Vegas – Other$325.041.2%1.9%
Las Vegas – Retail$247.36.8%1.0%
Las Vegas – Self Storage$0.00.0%0.0%
Los Angeles-Long Beach-Santa Ana, CA MSA$2,256.14.2%0.0%
Los Angeles – Hotel$161.93.0%-0.2%
Los Angeles – Industrial$0.00.0%0.0%
Los Angeles – Multifamily$6.80.0%0.0%
Los Angeles – Office$1,124.59.1%3.2%
Los Angeles – Other$66.42.1%-1.8%
Los Angeles – Retail$896.614.7%-0.9%
Los Angeles – Self Storage$0.00.0%-0.9%
Louisville/Jefferson County, KY-IN MSA$22.00.7%-0.4%
Louisville – Hotel$0.00.0%0.0%
Louisville – Industrial$0.00.0%0.0%
Louisville – Multifamily$6.90.5%0.5%
Louisville – Office$0.00.0%0.0%
Louisville – Other$0.00.0%0.0%
Louisville – Retail$15.13.0%-3.1%
Louisville – Self Storage$0.00.0%0.0%
Memphis, TN-AR-MS MSA$91.33.8%-0.1%
Memphis – Hotel$22.510.5%-2.3%
Memphis – Industrial$0.00.0%0.0%
Memphis – Multifamily$0.00.0%0.0%
Memphis – Office$0.00.0%0.0%
Memphis – Other$5.314.7%-3.3%
Memphis – Retail$63.516.7%4.4%
Memphis – Self Storage$0.00.0%0.0%
Miami-Fort Lauderdale-Pompano Beach, FL MSA$350.51.4%0.0%
Miami – Hotel$59.71.1%-0.2%
Miami – Industrial$0.00.0%0.0%
Miami – Multifamily$0.00.0%0.0%
Miami – Office$44.61.7%1.5%
Miami – Other$0.00.0%0.0%
Miami – Retail$246.24.5%0.0%
Miami – Self Storage$0.00.0%0.0%
Milwaukee-Waukesha-West Allis, WI MSA$245.510.1%-0.4%
Milwaukee – Hotel$16.510.3%-0.5%
Milwaukee – Industrial$0.00.0%0.0%
Milwaukee – Multifamily$0.00.0%0.0%
Milwaukee – Office$123.922.7%6.2%
Milwaukee – Other$0.00.0%0.0%
Milwaukee – Retail$105.124.2%0.5%
Milwaukee – Self Storage$0.00.0%0.0%
Minneapolis-St. Paul-Bloomington, MN-WI MSA$511.97.4%-2.3%
Minneapolis – Hotel$258.846.0%2.2%
Minneapolis – Industrial$0.00.0%0.0%
Minneapolis – Multifamily$9.80.3%-0.1%
Minneapolis – Office$77.53.9%-0.3%
Minneapolis – Other$165.733.5%0.5%
Minneapolis – Retail$1,400.074.5%0.7%
Minneapolis – Self Storage$0.00.0%0.0%
Nashville-Davidson-Murfreesboro-Franklin, TN MSA$58.31.0%-0.3%
Nashville – Hotel$51.43.4%-0.1%
Nashville – Industrial$0.00.0%0.0%
Nashville – Multifamily$0.00.0%0.0%
Nashville – Office$0.00.0%0.0%
Nashville – Other$0.00.0%0.0%
Nashville – Retail$6.80.9%-0.8%
Nashville – Self Storage$0.00.0%0.0%
New Orleans-Metairie-Kenner, LA MSA$115.03.4%1.7%
New Orleans – Hotel$56.55.3%5.3%
New Orleans – Industrial$0.00.0%0.0%
New Orleans – Multifamily$11.31.3%-0.1%
New Orleans – Office$26.95.2%0.3%
New Orleans – Other$14.69.6%-0.2%
New Orleans – Retail$5.60.9%0.2%
New Orleans – Self Storage$0.00.0%0.0%
New York-Northern New Jersey-Long Island, NY-NJ-PA MSA$8,192.56.3%0.2%
New York City – Hotel$885.323.6%-0.8%
New York City – Industrial$120.12.9%0.1%
New York City – Multifamily$1,159.63.2%-0.2%
New York City – Office$1,607.33.4%0.7%
New York City – Other$1,797.28.1%0.5%
New York City – Retail$2,623.020.3%1.0%
New York City – Self Storage$0.00.0%0.0%
Orlando-Kissimmee, FL MSA$102.81.0%-0.2%
Orlando – Hotel$13.50.5%0.0%
Orlando – Industrial$0.00.0%0.0%
Orlando – Multifamily$0.00.0%0.0%
Orlando – Office$61.011.5%0.5%
Orlando – Other$0.00.0%0.0%
Orlando – Retail$28.33.2%0.1%
Orlando – Self Storage$0.00.0%0.0%
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA$1,067.35.2%-0.8%
Philadelphia – Hotel$117.113.7%-4.0%
Philadelphia – Industrial$10.30.3%0.0%
Philadelphia – Multifamily$54.90.6%-0.9%
Philadelphia – Office$441.511.1%0.4%
Philadelphia – Other$414.233.1%3.6%
Philadelphia – Retail$29.31.3%-0.1%
Philadelphia – Self Storage$0.00.0%0.0%
Phoenix-Mesa-Scottsdale, AZ MSA$257.71.3%-0.2%
Phoenix – Hotel$54.13.1%-0.7%
Phoenix – Industrial$0.00.0%0.0%
Phoenix – Multifamily$0.00.0%0.0%
Phoenix – Office$52.02.3%0.2%
Phoenix – Other$17.72.1%1.2%
Phoenix – Retail$133.86.2%-1.7%
Phoenix – Self Storage$0.00.0%0.0%
Pittsburgh, PA MSA$290.96.4%0.3%
Pittsburgh – Hotel$8.34.8%-10.6%
Pittsburgh – Industrial$0.00.0%0.0%
Pittsburgh – Multifamily$50.72.3%2.2%
Pittsburgh – Office$103.710.2%0.3%
Pittsburgh – Other$115.533.0%3.0%
Pittsburgh – Retail$12.72.6%1.1%
Pittsburgh – Self Storage$0.00.0%0.0%
Portland-Vancouver-Beaverton, OR-WA MSA$326.73.7%-0.6%
Portland – Hotel$295.833.3%-0.2%
Portland – Industrial$0.00.0%0.0%
Portland – Multifamily$0.00.0%0.0%
Portland – Office$31.06.5%2.2%
Portland – Other$0.00.0%0.0%
Portland – Retail$0.00.0%0.0%
Portland – Self Storage$0.00.0%0.0%
Raleigh-Cary, NC MSA$21.80.6%-0.4%
Raleigh – Hotel$15.36.0%-0.4%
Raleigh – Industrial$0.00.0%0.0%
Raleigh – Multifamily$0.00.0%0.0%
Raleigh – Office$0.00.0%0.0%
Raleigh – Other$6.63.6%0.7%
Raleigh – Retail$0.00.0%-3.8%
Raleigh – Self Storage$0.00.0%0.0%
Richmond, VA MSA$156.94.7%-1.1%
Richmond – Hotel$0.00.0%0.0%
Richmond – Industrial$0.00.0%0.0%
Richmond – Multifamily$0.00.0%0.0%
Richmond – Office$0.00.0%0.0%
Richmond – Other$12.88.8%0.0%
Richmond – Retail$144.131.6%1.4%
Richmond – Self Storage$0.00.0%0.0%
Riverside-San Bernardino-Ontario, CA MSA$284.02.4%-0.4%
Riverside – Hotel$29.66.3%-2.6%
Riverside – Industrial$0.00.0%0.0%
Riverside – Multifamily$1.40.0%0.0%
Riverside – Office$0.00.0%0.0%
Riverside – Other$0.00.0%0.0%
Riverside – Retail$253.012.6%0.8%
Riverside – Self Storage$0.00.0%0.0%
Sacramento-Arden-Arcade-Roseville, CA MSA$16.90.3%-0.1%
Sacramento – Hotel$0.00.0%0.0%
Sacramento – Industrial$0.00.0%0.0%
Sacramento – Multifamily$0.00.0%0.0%
Sacramento – Office$6.10.8%0.0%
Sacramento – Other$10.93.0%-0.7%
Sacramento – Retail$0.00.0%0.0%
Sacramento – Self Storage$0.00.0%0.0%
Salt Lake City, UT MSA$6.10.1%-0.2%
Salt Lake City – Hotel$6.11.9%-0.2%
Salt Lake City – Industrial$0.00.0%0.0%
Salt Lake City – Multifamily$0.00.0%0.0%
Salt Lake City – Office$0.00.0%0.0%
Salt Lake City – Other$0.00.0%0.0%
Salt Lake City – Retail$0.00.0%-1.0%
Salt Lake City – Self Storage$0.00.0%0.0%
San Antonio, TX MSA$186.92.9%-1.1%
San Antonio – Hotel$16.46.3%-2.5%
San Antonio – Industrial$0.00.0%0.0%
San Antonio – Multifamily$0.00.0%0.0%
San Antonio – Office$56.213.2%0.0%
San Antonio – Other$0.00.0%0.0%
San Antonio – Retail$114.314.8%-0.5%
San Antonio – Self Storage$0.00.0%0.0%
San Diego-Carlsbad-San Marcos, CA MSA$63.60.5%-0.1%
San Diego – Hotel$56.62.9%-0.5%
San Diego – Industrial$0.00.0%0.0%
San Diego – Multifamily$4.10.1%0.0%
San Diego – Office$0.00.0%0.0%
San Diego – Other$0.00.0%0.0%
San Diego – Retail$2.90.2%0.0%
San Diego – Self Storage$0.00.0%0.0%
San Francisco-Oakland-Fremont, CA MSA$1,296.94.9%0.0%
San Francisco – Hotel$209.47.1%0.2%
San Francisco – Industrial$0.00.0%0.0%
San Francisco – Multifamily$450.85.6%-1.3%
San Francisco – Office$437.74.4%0.3%
San Francisco – Other$143.34.5%0.5%
San Francisco – Retail$55.64.9%0.8%
San Francisco – Self Storage$0.00.0%0.0%
San Jose-Sunnyvale-Santa Clara, CA MSA$146.50.7%0.4%
San Jose – Hotel$35.10.5%0.0%
San Jose – Industrial$0.00.0%0.0%
San Jose – Multifamily$6.40.2%0.2%
San Jose – Office$105.01.3%1.1%
San Jose – Other$0.00.0%0.0%
San Jose – Retail$0.00.0%0.0%
San Jose – Self Storage$0.00.0%0.0%
Seattle-Tacoma-Bellevue, WA MSA$58.20.3%-0.2%
Seattle – Hotel$35.82.6%-1.7%
Seattle – Industrial$0.00.0%0.0%
Seattle – Multifamily$0.00.0%0.0%
Seattle – Office$0.00.0%0.0%
Seattle – Other$22.41.4%-0.1%
Seattle – Retail$0.00.0%0.0%
Seattle – Self Storage$0.00.0%0.0%
St. Louis, MO-IL MSA$219.55.3%0.1%
St. Louis – Hotel$1.70.5%0.0%
St. Louis – Industrial$0.00.0%0.0%
St. Louis – Multifamily$3.20.2%-0.1%
St. Louis – Office$16.73.8%3.8%
St. Louis – Other$13.92.9%0.4%
St. Louis – Retail$184.020.2%0.9%
St. Louis – Self Storage$0.00.0%0.0%
Tampa-St. Petersburg-Clearwater, FL MSA$159.21.5%0.3%
Tampa – Hotel$58.88.1%-1.2%
Tampa – Industrial$0.00.0%0.0%
Tampa – Multifamily$1.20.0%0.0%
Tampa – Office$36.74.8%2.3%
Tampa – Other$21.46.4%6.4%
Tampa – Retail$41.16.0%2.1%
Tampa – Self Storage$0.00.0%0.0%
Tucson, AZ MSA$156.14.6%-0.6%
Tucson – Hotel$0.00.0%0.0%
Tucson – Industrial$0.00.0%0.0%
Tucson – Multifamily$0.00.0%0.0%
Tucson – Office$0.00.0%0.0%
Tucson – Other$0.00.0%0.0%
Tucson – Retail$156.120.0%0.2%
Tucson – Self Storage$0.00.0%0.0%
Virginia Beach-Norfolk-Newport News, VA-NC MSA$182.83.8%-0.8%
Virginia Beach – Hotel$14.83.3%-0.1%
Virginia Beach – Industrial$0.00.0%0.0%
Virginia Beach – Multifamily$0.00.0%0.0%
Virginia Beach – Office$0.00.0%0.0%
Virginia Beach – Other$4.43.5%0.4%
Virginia Beach – Retail$163.618.5%0.2%
Virginia Beach – Self Storage$0.00.0%0.0%
Washington-Arlington-Alexandria, DC-VA-MD-WV MSA$1,082.23.4%-0.1%
Washington, DC – Hotel$40.63.7%0.0%
Washington, DC – Industrial$0.00.0%0.0%
Washington, DC – Multifamily$0.00.0%0.0%
Washington, DC – Office$790.810.5%0.5%
Washington, DC – Other$107.77.5%4.7%
Washington, DC – Retail$143.14.3%0.4%
Washington, DC – Self Storage$0.00.0%0.0%
Grand Total$27,825.93.8%-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-2023Download

May 2023 Delinquency Report

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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.

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

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]
Loan375 Park AvenueEY Plaza
Balance$783 million$275 million
Special Servicer Transfer Date4/13/20234/11/2023

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.

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