December 2022 Delinquency Report

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January 2, 2023

*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 closed out year-end 2022 with a rate of 3.49% for the December 2022 reporting period. The delinquency rate marginally increased throughout Q4 2022 but was down overall compared to the start of the year. The delinquency rate (3.49%) is equal to the percentage of all delinquent specially serviced loans and delinquent non-specially serviced loans, for CRED iQ’s sample universe of $500+ billion in CMBS conduit and single asset single-borrower (SASB) loans. 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 5.16% from 4.95%. Aggregating the two indicators of distress – delinquency rate and special servicing rate – into an overall distressed rate (DQ + SS%) equals 5.33% of CMBS loans that are specially serviced, delinquent, or a combination of both. The overall distressed rate increased compared to the prior month’s distressed rate of 5.15%. These distressed rates typically track slightly higher than special servicing rates as most delinquent loans are also with the special servicer.

By property type, retail ended the year with the highest delinquency rate. The delinquency rate for retail increased 13% to 7.91%, compared to 7.00% as of November 2022. Retail started 2022 with the second-highest delinquency rate behind lodging; however, a lack of meaningful and sustained delinquency cures caused retail to be a laggard among property types for most of the year.

December’s delinquency retail rate was pushed higher in December by several maturity defaults. As one example, a $162.9 million loan secured by West County Center in Des Peres, MO defaulted on its December 1, 2022 maturity date. The collateral is a 743,945-sf portion of a regional mall owned by CBL Properties. The loan had been in special servicing since the onset of the pandemic in April 2020 but remained current in payment until its maturity default.

In addition to retail, delinquency rates for multifamily (2.61%), office (1.76%), and industrial (0.17%) also exhibited month-over-month increases during December 2022. Conversely, the delinquency rate for loans secured by lodging properties (4.63%) was lower compared to the prior month. Over the course of 2022, the delinquency rate for lodging has declined by more than 50% as part of a significant sector recovery from pandemic-related distress.

Switching focus to special servicing rates by property type, loans secured by office properties have exhibited the largest month-over-month increase among all property types. The office special servicing rate for December 2022 was 3.77%, compared to 3.31% as of the prior month. One of the largest office loans to transfer to special servicing was the $243.6 million Republic Plaza loan, which is secured by a 1.3 million-sf tower located in the CBD of Denver, CO. The loan defaulted on its December 1, 2022 maturity date.

Maturity defaults also stressed the special servicing rate for retail. The retail special servicing rate increased to 11.04% as of December 2022. One of the larger retail maturity defaults was a $75.4 million mortgage secured by Avenue Forsyth, a 523,535-sf retail center located in Cumming, GA. The special servicing rates for lodging, multifamily, and industrial commercial real estate loans declined compared to the prior month.

*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 5.33%, which followed a relatively sharp increase in the overall delinquency rate. The increase in the overall CMBS distressed rate was primarily caused by loans entering maturity default such as the aforementioned West County Center and Republic Plaza loans. For additional information about these two loans, click View Details below:

	[View Details]	[View Details]
Loan	Republic Plaza	West County Center
Balance	$243,621,128	$161,887,620
Special Servicer Transfer Date	11/22/2022	4/6/2020

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.

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CRED iQ’s Most-Read Posts of 2022

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CRED iQ

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December 31, 2022

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As we prepare to turn the page to a new year, we decided to take one final look at 2022.

The CRED iQ team made the most out of 2022 for our clients by providing market constituents with commercial real estate analytics, loan and property data as well as fresh takes on commercial real estate trends and new cycles.

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Here are the stories that attracted the most attention in 2022:

#1   2023 CRE Maturity Outlook: The Year Ahead – Dec ’22:  Read here
#2    January 2022 Delinquency Report – Jan ’22:  Read here
#3    Top 20 Markets – Multifamily Revenue per Unit – Nov ’22:  Read here
#4    CMBS and CRE: Implications of Kohl’s Takeover – March’22:  Read here
#5    Aronson Joins CRED iQ as Chief Commercial Officer – Dec ’22:  Read here
#6    Starwood Mall Portfolio – March’22:  Read here
#7    Bed Bath & Beyond Closures – Jan ’22:  Read here
#8    Commercial Real Estate Auctions – March 2022 – March ’22:  Read here
#9    Lease Expirations – April ’22:  Read here
#10  Rising Interest Rates for CMBS Loans –June ’22:  Read here

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.

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

Aronson Joins CRED iQ as Chief Commercial Officer

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CRED iQ

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December 14, 2022

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Welcome Chris Aronson CRED iQ — Chris Aronson Joins CRED iQ as the new Chief Commercial Officer

Former EDR and Compstak Executive joins CRE data firm CRED iQ

“CRED iQ is the platform that the CRE world has been begging for—I have never witnessed this level of client enthusiasm,” said Aronson. “It is an honor to join this exceptional team as we enter an exciting new chapter of growth and innovation.”
Chris Aronson

NEW YORK and PHILADELPHIA: CRED iQ, the fastest growing provider of commercial real estate (CRE) data, analytics and valuation is pleased to announce that Chris Aronson has joined the company as Chief Commercial Officer.

Chris brings deep leadership experience serving CRE investors, owners, and financial institutions. As CEO of EDR, he oversaw the delivery of CRE loan underwriting workflow/risk management software and data to over one thousand lenders globally. He then led the sale of the business for $205 Million. Chris also served as CEO of eDiligence, as well as Chief Commercial Officer at CompStak, both CRE data and analytics firms. Throughout his career, he has delivered strong growth and liquidity to investors, colleagues and stakeholders, including three successful exits.

“CRED iQ is the platform that the CRE world has been begging for—I have never witnessed this level of client enthusiasm,” said Aronson. “It is an honor to join this exceptional team as we enter an exciting new chapter of growth and innovation.”

“Chris is a world-class executive with a proven track record of launching & growing several data & tech businesses throughout his career, and I couldn’t be more thrilled to be working with him,” said Michael Haas, CRED iQ’s Co-Founder & CEO. “Chris’s leadership and operational experience will be invaluable as we launch new products next year and continue servicing our growing enterprise customer base.”

CRED iQ provides actionable data to commercial real estate lenders, brokers, and investors. CRED iQ’s customers use the platform to identify valuable leads for leasing, lending, refinancing, distressed debt, and acquisition opportunities. Additionally, CRED iQ’s proprietary technology & valuation platform allows for the seamless integration of third-party data vendors to streamline workflows and improve business decisions.

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About CRED iQ

CRED iQ is a commercial real estate data, analytics, and valuation platform providing actionable intelligence to CRE and capital markets investors. The data platform is powered by over $2.0 trillion in transactions and data covering CRE, CMBS, CRE CLO, SBLL, and all of the loans securitized within the GSE/Agency universe.

CMBS – November 2022 Loan Dispositions and Payoffs

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CRED iQ

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December 13, 2022

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CMBS conduit transactions incurred approximately $116 million in realized losses during November 2022 via the workout of distressed assets. CRED iQ identified 16 workouts classified as dispositions, liquidations, or discounted payoffs in November 2022. Of the 16 workouts, seven were resolved without a loss. One resolution — Ocean East Mall — was reported as having excess proceeds available after its disposition. Of the nine workouts resulting in losses, severities for the month of November ranged from 12% to 89%, based on outstanding balances at disposition. Aggregate realized losses in November 2022 were approximately 20% lower than October despite a similar number of workouts. On a monthly basis, realized losses for CMBS transactions averaged approximately $136.4 million year-to-date.

By property type, workouts were concentrated in retail, accounting for five of the 16 distressed resolutions. Lodging properties accounted for the next highest number of distressed workouts with four. Distressed workouts for office properties had the highest total of aggregate realized losses (approximately $70 million) and the highest average loss severity (50%) across all property types. The largest individual realized loss from CRED iQ’s observations was from the liquidation of two REO midwestern office properties with approximately $72.9 million of outstanding debt prior to disposition. The properties were part of the nine-property IRET Portfolio and had been specially serviced since 2016. All nine properties became REO and were subsequently liquidated over a workout period that spanned more than eight years, including the final two liquidations in November. Losses from the resolution totaled $64.7 million, equal to a loss severity of 89% based on the assets’ outstanding debt. The outstanding debt amount and loss severity from the IRET Portfolio were both the largest among this month’s distressed workouts.

The second-largest workout by outstanding debt amount was a note sale of a $72 million mortgage secured by the Bellis Fair Mall in Bellingham, WA. The note was secured by a 538,226-sf portion of the 776,136-sf regional mall. The note was sold for less than the collateral property’s April 2022 appraisal of $49.1 million, equal to $91/sf. The loan transferred to special servicing in February 2022 due to maturity default and was resolved eight months later with a 36% loss severity.

Excluding defeased loans, there was approximately $8.2 billion in securitized debt among CMBS conduit, SBLL, and Freddie Mac securitizations that was paid off or liquidated in November 2022, which was approximately an 11% increase compared to $7.3 billion in October 2022. In November, 6% of the loan resolutions were categorized as dispositions, liquidations, or discounted payoffs. The percentage of distressed workouts was 4.7% in the prior month. Approximately 35% of the loans were paid off with prepayment penalties, which was slightly higher than the prior month.

By property type, multifamily had the highest total of outstanding debt pay off in November with approximately half of the total by balance. Office had the next highest outstanding debt pay off with 18% of the total. Among the largest individual payoffs was a $265 million mortgage secured by the Chrysler East Building located at 666 Third Avenue in Manhattan, NY.

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.

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Workforce Reductions in NYC Impact Commercial Real Estate

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CRED iQ

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December 8, 2022

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CRED iQ tracked major workforce reductions for the New York City metropolitan area through year-to-date 2022. A major workforce reduction is defined as a closing or layoff event that impacts 25 or more employees from a business that has more than 50 full-time employees. CRED iQ identified approximately 130 of these events, which have impacted nearly 8,000 employees from January 2022 through the first week of December 2022.

Most notable from our observations is a significant surge in workforce reductions in November 2022, when more than 1,600 employees were affected. On average, about 700 employees were impacted by workforce reductions per month. As such, the month of November exhibited activity that was more than two times greater than the monthly average. Overall, the number of employees impacted by workforce reductions is significantly higher when accounting for business with less than 50 full-time employees and events affecting less than 25 employees.

Large reductions in workforce are often sources of headline risk with the likes of Amazon, Facebook, Twitter, and Snap all making similar announcements in 2022 regarding a reduced workforce. However, the impacts of these events may not be evident through high-level labor statistics. The US unemployment rate, often considered a lagging indicator, has declined from 4% in January 2022 to 3.7% as of November 2022. On a more granular level, the unemployment rate for the New York City MSA has declined 25% from January 2022 (5.6%) through October (4.2%). With a large workforce reduction in September 2022 and the surge of reduction events in November 2022, it remains to be seen if the activity is enough to soften the unemployment rate for New York City MSA over time. Often, separation or closing dates are delayed by a few months and permanent reductions take time to bake into high-level statistics.

A more immediate impact may be seen in the commercial real estate industry. In theory, a reduction in workforce by a company can be followed by a reduction in the need for commercial space. CRED iQ identified notable CMBS properties that have been impacted, including 225 Park Avenue. Facebook occupied 266,460 sf of space at 225 Park Avenue, equal to 39% of NRA at the property, but the firm terminated its lease agreement in October 2022, five years prior to lease expiration in October 2027. The property secures a $235 million mortgage that matures in June 2027.

Another notable workforce event was Warner Media’s shuttering of its CNN+ platform in April 2022. CNN+ operated as a segment of Turner Broadcasting under the Warner Media umbrella with operations based out of 30 Hudson Yards. Warner Media occupies the entirety of the 1.4 million-sf office condo with a lease that expires in June 2034. The CNN+ business segment took up at least one of Time Warner’s 26 floors of space as well as additional studio space.

Most common among property uses that were impacted by workforce reductions were hotels and restaurants. Some hotels were permanently closed while other lodging properties lost contracts to provide temporary housing for COVID quarantines during the year. One hotel in CMBS that was impacted was the Mr. C Seaport Hotel. The 66-key hotel secures a $30.9 million mortgage that transferred to special servicing in August 2022. Reports indicate that the borrower is working to sell the hotel to another party. As year-end 2022 comes to a close, a close eye on the possibility of tenants downsizing can foreshadow implications for associated commercial real estate properties.

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.

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Maturing Loans in 2023: Video Recording

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CRED iQ

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December 7, 2022

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During our recent webinar, CRED iQ’s Co-Founder and CEO discussed the record CRE loan maturities on deck for 2023. $162 Billion! Each maturity is an opportunity for Investors, Lenders and Brokers. The webinar dives deep into the following topics:

Building a list of Maturing Loans
How Brokers, Lenders and Investors can Find Opportunities
Contacting Borrowers/Owners & Lenders with CRED iQ
High Interest Rates & Maturity Risk
CRE Valuations in Today’s Market

If you happened to miss the live webinar, don’t worry! We have a video recording that’s available here:

Watch Video Recording Now

Zoom Video Passcode: CW^%24#U

CRED iQ gets you ahead of the market. Identify and track all maturities and then explore the existing terms, performance, status and market analytics for each property securing the loan. You can even run valuation scenarios and review comps right on the platform. We have the industry’s best ownership data and contact information—putting you directly in touch with the decision makers for your targeted opportunities.

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.

2023 CRE Maturity Outlook: The Year Ahead

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CRED iQ

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December 1, 2022

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CRED iQ prepared for the year ahead in commercial real estate by examining securitized commercial mortgages with maturity dates scheduled in 2023. CRED iQ’s database has approximately $162 billion in commercial mortgages that are scheduled to mature in 2023, including loans securitized in CMBS conduit trusts, single-borrower large-loan securitizations (SBLL) and CRE CLOs, as well as multifamily mortgages securitized through government-sponsored entities. The next 12 months have the highest volume of scheduled maturities for securitized CRE loans over a period of 10 years ending 2032.

By securitization type, the SBLL securitization subset of nearly $100 billion comprises the majority (61%) of scheduled maturities in 2023; however, approximately 94% of that balance is tied to floating-rate loans that have extension options available, providing no assurances of refinancing or new origination opportunities.

Explore Loans Maturing in 2023

CMBS conduit loans account for the second-highest total of loans with 2023 maturity dates with approximately $29 billion in 2023 scheduled maturities, accounting for 18% of total scheduled maturities. This group of loans provides for diverse observation across property type, building class, and geographic location. Breaking down 2023 conduit maturities by property type, retail has the highest concentration with 42% of outstanding debt and is followed by office with 22%. Lodging has the third-highest concentration with 14% of the outstanding balance of scheduled maturities in 2023.

From a monthly perspective, CMBS conduit loan maturities are dispersed fairly evenly throughout the year. May 2023 has the highest total of scheduled maturities out of any month with $3.9 billion. September 2023 has the second-highest total with $2.9 billion in scheduled maturities and is followed by January 2023, also with $2.9 billion. The January 2023 subtotal of maturities has potential to drop significantly over the next few weeks as refinances close ahead of yearend. Loans generally have three to four-month open periods so lenders often have the opportunity to provide refinancing earlier than stated maturity dates.

Approximately 12% of the 2023 scheduled maturity debt for CMBS conduits is already delinquent or in special servicing, foreshadowing potential maturity defaults, delayed payoffs, or extended workouts.

Multifamily

The multifamily sector is the only property type represented across all various securitization structures in the 2023 maturity analysis, which includes Fannie Mae and Ginnie Mae mortgage debt. Aside from single-borrower large-loan multifamily loans with relatively higher probabilities of being extended, Freddie Mac securitizations accounted for the second-highest outstanding balance of scheduled maturities in 2023 with approximately $7.7 billion. Following close behind, there is about $7.5 billion in multifamily loans securitized in CRE CLOs that are scheduled to mature in 2023. Many multifamily loans securitized in CRE CLO vehicles are secured by transitional apartment properties moving up in building class through value-add initiatives. Although many of these loans have floating rates, the idea of locking in fixed-rate financing after completion of value adds may be an optimal completion of properties’ business plans. Fannie Mae multifamily loans also account for a considerable portion of 2023 maturities with $7.3 billion in outstanding debt coming due over the next year.

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Retail

Among CMBS conduit debt, retail is the property type with the highest volume of schedule maturities in 2023. There is over $12 billion in retail loans coming due in 2023, accounting for 42% of total scheduled 2023 maturities. Loans secured by retail properties have had the highest delinquency rates among all properties times for most of 2022. CRED iQ’s delinquency rate for retail was 7.06% as of October 2022 and has potential to rise throughout 2023 as maturity defaults occur in the process of sorting out payoff resolutions.

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Office

Perhaps one of the highest concerns from lenders is refinancing office loans. In the CMBS conduit environment, there is approximately $6.3 billion in loans secured by office properties scheduled to mature in 2023. This accounts for 22% of the total 2023 CMBS conduit maturities. CRED iQ’s special servicer rate for office loans has increased for three consecutive months from July 2022 through October 2022. Recessionary pressures, downsizing from tech firms and others, and the evolution of workplace dynamics from the fallout of the pandemic have all been encompassing forces have had an adverse impact on office loan originations.

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Looking Back and Looking Forward

Aside from a focus on 2023 maturities, the year ahead brings plenty of opportunities within the CRE industry. Looking back — there is over $35 billion in outstanding debt with a past due scheduled maturity date that still needs to be worked out as well as several billion dollars in REO assets that are on track to be liquidated. Looking ahead to 2024 — CRED iQ’s early estimates indicated nearly $155 billion in scheduled maturities; however, the aggregate total is fluid when considering loan extensions and potential prepayments throughout 2023.

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.

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Top 20 Markets – Multifamily Revenue per Unit

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CRED iQ

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November 21, 2022

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CRED iQ examined revenue trends for over 10,000 multifamily properties across the Agency and CMBS securitization universe covering over $800 billion of securitized debt. Data was derived from full-year property-level financial statements for 2021. Partial-year financial statements from 2022 were also considered when available and appropriate. However, annualized financial statements from partial-year periods may have included abnormalities from the timing of revenue recognition in certain cases and were subsequently excluded. Property-level financial statements for securitized mortgages are generally reported on a lag basis and can take several months to be reported after borrowers’ initial reporting and subsequent servicer adjustments.

In our observations, revenue per occupied unit included gross earnings for a multifamily property. Total revenue per unit comprised base rents as well as ancillary income, which included supplemental tenant services such as parking, laundry, and common area amenities.

CRED iQ aggregated year-end 2021 financial data by MSA for the 100 largest primary and secondary multifamily markets. Revenue figures were then analyzed on a per unit basis and adjusted for property-level occupancy performance to determine the highest grossing multifamily markets in the country. As a baseline, average revenue per occupied unit across all primary and secondary markets was approximately $1,568. Isolating the Top 20 markets, the average revenue per occupied unit was $1,918 – approximately 22% higher than the average for all markets. MSAs located in the state of California accounted for seven (35%) of the Top 20 markets with the highest revenue per occupied unit. Among the top MSAs in California were San Jose and San Francisco, which both ranking in the five highest grossing multifamily markets.

The Bridgeport-Stamford-Norwalk, CT MSA had the highest average revenue per occupied unit in 2021 with $2,648. Operating leverage averaged about 45% with average operating expenses per unit of $1,203. The Bridgeport market barely edged out the New York-Northern New Jersey-Long Island MSA, which had average revenue per occupied unit of $2,644 – less than 1% lower than Bridgeport. The average operating leverage for the New York MSA was approximately 44%, which was in line with the Bridgeport MSA. New York and Bridgeport were two of six submarkets with average revenue per occupied unit that was greater than $2,000.

Accounting for operating expenses on a per unit basis, the Top 20 highest grossing markets had an average operating expense ratio of 44%. The Denver-Aurora, CO MSA has the highest margins with an average operating expense ratio of 37% while multifamily properties in the Buffalo-Niagara Falls, NY MSA performed with the highest operating leverage, equal to 50%. When accounting for lower operating leverage, markets can be viewed more favorably based on Net Operating Income (NOI) potential. Comparable expense per unit figures can vary widely across markets in a number of categories, including real estate taxes, insurance premiums, or utility costs.

Shifting focus to the opposite side of the scale, some notable high-inventory markets with relatively lower revenue per occupied unit metrics included Kansas City ($995), Detroit ($1,081), San Antonio ($1,143), Houston ($1,146), and Columbus, OH ($1,161).

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.

Webinar: Maturing Loans in 2023

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CRED iQ

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November 11, 2022

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Please join CRED iQ for a live webinar on December 1, 2022 at 2:00 PM Eastern for a lively discussion about commercial real estate loans with maturity dates in 2023. Mike Haas, Co-Founder, and Shane Beeson, Head of Sales, will present strategies for identifying CRE opportunities in a rising rate environment.

Building a list of Maturing Loans
How Brokers, Lenders and Investors can Find Opportunities
High Interest Rates & Maturity Risk
CRE Valuations in Today’s Market
Contacting Borrowers/Owners & Lenders with CRED iQ

Register for this webinar using the link below:

Register Here!

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.

CMBS – October 2022 Loan Dispositions and Payoffs

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CRED iQ

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November 8, 2022

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CMBS conduit transactions incurred approximately $147 million in realized losses during October 2022 via the workout of distressed assets. CRED iQ identified 15 workouts classified as dispositions, liquidations, or discounted payoffs in October 2022. Of the 15 workouts, only two of the assets were resolved without a loss. Of the 13 workouts resulting in losses, severities for the month of September ranged from less than 1% to 100%, based on outstanding balances at disposition. Aggregate realized losses in October 2022 were more than twice the total of losses in September despite the same number of workouts. On a monthly basis, realized losses for CMBS conduit and SBLL transactions averaged approximately $138.5 million year-to-date.

By property type, workouts were concentrated in retail, accounting for eight of the 15 distressed resolutions. Lodging properties accounted for the next highest number of distressed workouts with four. Distressed workouts for retail properties had the highest total of aggregate realized losses (over $95 million) and the highest average loss severity (50%) across all property types. The largest individual realized loss from CRED iQ’s observations was from a $39.7 mortgage secured by Pierre Bossier Mall, a 265,347-sf portion of a regional mall located outside of Shreveport, LA. The loan transferred to special servicing in June 2020 and ultimately liquidated with realized losses to its CMBS trust of $27.9 million, equal to a 70% loss severity based on the loan’s outstanding balance prior to disposition.

The largest loss by severity was associated with Johnstown Galleria, a 700,000-sf regional mall located in western Pennsylvania. The retail property became REO in November 2021 and had $13.6 million in outstanding debt prior to disposition. The debt was formerly secured by a leased fee interest in a 46-acre land parcel, which excluded the improvements of the mall at the time — the mall operated with a ground lease that was terminated after payment default. The REO asset, inclusive of the land and the improvements, was liquidated with a 100% loss severity.

The largest workout by outstanding debt amount was the liquidation of a leasehold interest in Hilton Times Square, a 460-key full-service hotel located in Manhattan, NY. The REO property was reportedly sold for $85 million to a group that included Apollo Global Management and hotel operations reopened this month for the first time since a pandemic-induced closure in early 2020. The asset had outstanding debt of $75.6 prior to its liquidation and was resolved with a 30% loss severity, accounting for liquidation expenses in excess of $26 million.

Excluding defeased loans, there was approximately $7.3 billion in securitized debt among CMBS conduit, SBLL, and Freddie Mac securitizations that was paid off or liquidated in October, which was approximately a 5% increase compared to $7 billion in September 2022. In October, 4.7% of the loan resolutions were categorized as dispositions, liquidations, or discounted payoffs. The percentage of distressed workouts was 3.6% in the prior month. Approximately 30% of the loans were paid off with prepayment penalties, which was a significant decline compared to the prior month.

By property type, multifamily had the highest total of outstanding debt pay off in September with 49% of the total by balance. Office had the next highest outstanding debt pay off with 20% of the total. Among the largest individual payoffs was a $700 million mortgage secured by Blackstone’s Center for Life Science, a 704,159-sf life sciences building in Boston, MA that features office and lab space. The loan was refinanced in October with a $750 million mortgage.

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.

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