{"id":4360,"date":"2025-01-17T01:01:08","date_gmt":"2025-01-17T01:01:08","guid":{"rendered":"https:\/\/cred-iq.com\/blog\/?p=4360"},"modified":"2025-01-17T01:01:42","modified_gmt":"2025-01-17T01:01:42","slug":"cre-clo-distress-rate-reaches-a-new-record-high-of-13-8-in-december-driven-by-a-180bp-increase-in-special-servicing-transfers","status":"publish","type":"post","link":"https:\/\/cred-iq.com\/blog\/2025\/01\/17\/cre-clo-distress-rate-reaches-a-new-record-high-of-13-8-in-december-driven-by-a-180bp-increase-in-special-servicing-transfers\/","title":{"rendered":"CRE CLO Distress Rate Reaches a New Record High of 13.8% in December – Driven by a 180BP Increase in Special Servicing Transfers"},"content":{"rendered":"\n

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As 2025 begins to unfold, we wanted to calibrate our outlook for the new year, by looking backward.  This week, we explore how the CRE CLO ecosystem performed during December, along with full-year 2024.<\/p>\n\n\n\n

The CRED iQ CRE CLO distress rate added 60 basis points in December \u2013 reaching a new high of 13.8%.  Underpinning the distress rate, December\u2019s delinquency rate came in largely flat at 11.8%; while the special servicing rate saw a 180-basis point increase, reaching 9%.  <\/p>\n\n\n\n

The CRED iQ distress rate includes any loan reported 30 days delinquent or worse, past their maturity, specially serviced, or a combination of these.  We also examined the most recent property-level net operating income figures and compared them to underwritten expectations.<\/p>\n\n\n\n

CRED iQ\u2019s analysis revealed that that 61.9% of CRE CLOs loans are operating below a 1.00 DSCR (NCF), up from 59.2% last month. Net Cash Flow (NCF) is a key variable in calculating a loan\u2019s DSCR which determines the strength and creditworthiness of a given loan.<\/p>\n\n\n

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Payment Status<\/strong><\/p>\n\n\n\n

Looking across payment status in December, 33.7%  of loans are performing matured (up 180 basis points from last month).   31.6%  of loans were non-performing matured (down from 38.4%  last month), meaning 65.3% of the CRE CLO loans in our study are past their maturity dates, down from 70.3% in last month\u2019s report. Delinquent loans that have not past their maturity date accounted for 20.1% of the distressed loans, up from 19.5% in the previous month.<\/p>\n\n\n\n

Regional Analysis<\/strong><\/p>\n\n\n\n

Our analysis broke out CRE CLO assets to their respective MSAs to understand how the distress has manifested at the MSA level.<\/p>\n\n\n\n

Month-over-month, Kansas City moved into the #3 position with 45.5% of their loans currently in distress.  <\/p>\n\n\n\n

Indianapolis-Carmel remains in first place with a 70.6% distress rate\u2014while trimming 270  basis points from the November print  (73.3%) of their CRE CLO loans in some form of distress.<\/p>\n\n\n\n

Columbus Ohio moves into second place with a flat December print of 46.7%.  Richmond, VA falls out of the top three. <\/p>\n\n\n

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Analysis Scope & Methodology<\/strong><\/p>\n\n\n\n

CRED iQ consolidated all of the loan-level performance data for every outstanding CRE CLO loan to measure the underlying risks associated with these transitional assets. Our team examined $64.3 billion in active CRE CLO loans. Many of these loans were originated in 2021 at times where cap rates were low, valuations high, low interest rates, and are starting to run into maturity issues given the spike in rates.<\/p>\n\n\n\n

Some of the largest issuers of CRE CLO debt over the past five years include MF1, Arbor, LoanCore, Benefit Street Partners, Bridge Investment Group, FS Rialto, and TPG. The vast majority of the $79.1 billion in CRE CLO loans are structured with floating rates with 3-year loan terms equipped with loan extension options if certain financial hurdles are met.<\/p>\n\n\n\n

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Access 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":"

As 2025 begins to unfold, we wanted to calibrate our outlook for the new year, by looking backward.  This week, we explore how the CRE CLO ecosystem performed during December, along with full-year 2024. The CRED iQ CRE CLO distress rate added 60 basis points in December \u2013 reaching a new high of 13.8%.  Underpinning […]<\/p>\n","protected":false},"author":3,"featured_media":4361,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","footnotes":""},"categories":[13],"tags":[4,5,24,6,7,8,14],"class_list":{"0":"post-4360","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-cmbs-delinquency-report","8":"tag-cmbs","9":"tag-commercial-real-estate-data","10":"tag-cre-clo","11":"tag-delinquency","12":"tag-distressed-properties","13":"tag-loan-data","14":"tag-special-servicing"},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/posts\/4360","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=4360"}],"version-history":[{"count":1,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/posts\/4360\/revisions"}],"predecessor-version":[{"id":4364,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/posts\/4360\/revisions\/4364"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/media\/4361"}],"wp:attachment":[{"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/media?parent=4360"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/categories?post=4360"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cred-iq.com\/blog\/wp-json\/wp\/v2\/tags?post=4360"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}