{"id":3906,"date":"2024-08-02T11:20:05","date_gmt":"2024-08-02T11:20:05","guid":{"rendered":"https:\/\/cred-iq.com\/blog\/?p=3906"},"modified":"2024-12-25T02:05:28","modified_gmt":"2024-12-25T02:05:28","slug":"troubled-loan-workout-strategies-a-mid-year-report","status":"publish","type":"post","link":"https:\/\/cred-iq.com\/blog\/2024\/08\/02\/troubled-loan-workout-strategies-a-mid-year-report\/","title":{"rendered":"Troubled Loan Workout Strategies: A Mid-Year Report"},"content":{"rendered":"\n

<\/p>\n\n\n\n

Modifications and Foreclosures Spike; While Resolutions and REO Percentages Drop<\/strong><\/p>\n\n\n\n

This week, our CRED iQ research team explored trends in workouts and resolutions for CRE securitized loans so far in 2024.  We wanted to understand how the continued elevated interest rate environment is impacting how distressed loans are ultimately resolved. Our team compared the special servicer\u2019s workout strategies from June 2024 with December 2023 and analyzed how the first six months 2024 has evolved. <\/p>\n\n\n\n

Our analysis compared workout strategies across $71 billion in loan balances (6,018 loans) in December of 2023 with $81 billion (6,359 loans) in June of 2024.  The top 4 workout strategies used by special servicers from this dataset includes:  1) Successful Resolution 2) Foreclosure or Deed-in-Lieu of Foreclosure 3) Modification or Loan Extension and 4) Return to the Master Servicer.<\/p>\n\n\n\n

CRED iQ notes that 45.9% of specially serviced loans were labeled as \u201cResolved\u201d in December ’23 compared to only 40.5% of loans in June 2024.  Similarly, loans with the special servicer headed for a full payoff dropped from 1.1% in December to 0.7% in June 2024.  <\/p>\n\n\n\n

The second-most common strategy, \u201cForeclosure\u201d saw a notable increase when comparing December \u201923 to June \u201924 rising from 9.2% of all loans to 12.2%, a 33% increase in six months.  REO strategies saw a drop in the period from 7.2% to 6.4%.  Note sale workouts declined from 0.8% to 0.4% in June 2024.<\/p>\n\n\n\n

Maturity Extensions and loan modifications, or the so called \u201cextend and pretend\u201d category continued to grow in strength as this strategy has spiked from 6.8% in December \u201923 to 11.2% in June 2024, a 65% increase. <\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

Notable Workout<\/strong> Example<\/strong><\/p>\n\n\n\n

The Point at Caldwell Station, a 297-unit multifamily property, is backed by a $56.3 million senior CRE CLO loan and $15.0 million of mezzanine debt. The loan was scheduled to mature in March 2024 with a final extended maturity date of September 2027, if all three extension options are exercised. The loan failed to pay off at its initial maturity date and the special servicer is pursuing foreclosure.<\/p>\n\n\n\n

Built in 2023 and located in the North Charlotte submarket of Charlotte, the asset was appraised for $101.5 million (as-is) with a stabilized value of $115.0 million. Stabilization was anticipated for October 2024 with an DSCR (NCF) of 0.89 and occupancy of 93.0%. The collateral was not leased at underwriting and remained vacant as of March 2024.<\/p>\n\n\n\n

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Sign Up for CRED iQ Today<\/a><\/div>\n<\/div>\n\n\n\n

About CRED iQ<\/strong><\/p>\n\n\n\n

CRED iQ<\/a> is a market data provider that offers a robust suite of data and software solutions tailored for commercial real estate and finance professionals.<\/p>\n\n\n\n

With over $2.3 trillion of CRE loans, CRED iQ delivers instant access to a comprehensive range of financial data and analytics for millions of properties in every market. CRED iQ\u2019s data and analytical capabilities are instrumental in helping investors, lenders and brokers make informed and strategic decisions critical to their business.<\/p>\n","protected":false},"excerpt":{"rendered":"

Modifications and Foreclosures Spike; While Resolutions and REO Percentages Drop This week, our CRED iQ research team explored trends in workouts and resolutions for CRE securitized loans so far in 2024.  We wanted to understand how the continued elevated interest rate environment is impacting how distressed loans are ultimately resolved. Our team compared the special […]<\/p>\n","protected":false},"author":3,"featured_media":3915,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","footnotes":""},"categories":[9],"tags":[4,5,7,33,8,34],"class_list":{"0":"post-3906","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-research","8":"tag-cmbs","9":"tag-commercial-real-estate-data","10":"tag-distressed-properties","11":"tag-distressed-workouts","12":"tag-loan-data","13":"tag-workout-strategy"},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/posts\/3906","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/comments?post=3906"}],"version-history":[{"count":1,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/posts\/3906\/revisions"}],"predecessor-version":[{"id":4244,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/posts\/3906\/revisions\/4244"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/media\/3915"}],"wp:attachment":[{"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/media?parent=3906"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/categories?post=3906"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/tags?post=3906"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}