{"id":3231,"date":"2023-09-08T00:49:58","date_gmt":"2023-09-08T00:49:58","guid":{"rendered":"https:\/\/cred-iq.com\/blog\/?p=3231"},"modified":"2023-09-08T00:49:58","modified_gmt":"2023-09-08T00:49:58","slug":"cred-iq-august-2023-cmbs-delinquency-report","status":"publish","type":"post","link":"https:\/\/cred-iq.com\/blog\/2023\/09\/08\/cred-iq-august-2023-cmbs-delinquency-report\/","title":{"rendered":"CRED iQ August 2023 CMBS Delinquency Report"},"content":{"rendered":"\n

The\u00a0CRED iQ<\/a><\/strong>\u00a0CMBS delinquency rate has continued to rise, reaching 5.07% in August 2023. This represents a 40 basis point (0.40%) increase from a month prior, and an 177 basis point increase since January 2023<\/strong>. Notably, 62% of the newly delinquent loans, based on their outstanding balance, were a result of maturity defaults or refinancing challenges.<\/p>\n\n\n\n

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CRED iQ\u2019s special servicing rate, equal to the percentage of CMBS loans that are with the special servicer (delinquent or non-delinquent), increased modestly month-over-month to 6.73%, from 6.72%. The special servicing rate has continued to climb YTD 2023. Aggregating the two indicators of distress \u2013 delinquency rate and special servicing rate \u2013 the overall distressed rate (DQ + SS%) rose to 7.17% – an increase of 14 basis points. Last month\u2019s distressed rate was equal to 7.03%, which was 14 basis points lower that the July 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.<\/p>\n\n\n\n

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By property type, distress in the office sector continued to build in August 2023. The office distressed rate for August is 9.36%, which compared to 8% as of July 2023. The month-over-month surge of 136 basis points in office delinquency was equal to a 17% increase. 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 2023.<\/p>\n\n\n\n

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An example of why office delinquency rates have gone up significantly month over month can be seen with\u00a0995 Market Street<\/strong><\/a>\u00a0in San Francisco. This loan was part of the LSTR 2016-4 transaction and had a balance of $45 million. On July 21, 2023, it was transferred to Special Servicing, and currently, it’s 30-59 days behind in payments.<\/p>\n\n\n\n

What’s important to note here is that the Special Servicer reports that the borrower hasn’t paid for July and has indicated they won’t make any more payments. Unfortunately, this situation is likely to continue as office vacancies increase, and Net Absorption (the rate at which office space is being occupied) continues to decline.<\/p>\n\n\n\n

In August, Distressed rates for different types of properties showed the following changes:<\/p>\n\n\n\n