CRED iQ’s Overall CRE Delinquency Rate Declines this Month, While Office Defaults Tick Up

CRED iQ

RADNOR, PA — The CRED iQ’s delinquency rate had a modest decline this month, which marks its 18th consecutive improvement. The delinquency rate, 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 was 4.59%. Additionally, CRED iQ’s special servicing rate, equal to the percentage of CMBS loans that are with the special servicer (delinquent and non-delinquent), declined to 7.06%, after a brief increase in the prior month. The special servicing rate has declined 11 out of the 12 previous months.

CRED iQ Delinquency and Special Servicing Trend Infographic
CRED iQ’s Delinquency & Special Servicing Trend (submitted Image)

Aggregating the two indicators of distress – delinquency rate and special servicing rate – into an overall distressed rate (DQ + SS%) equals 7.18% of CMBS loans that are specially serviced, delinquent, or a combination of both. The overall distressed rate declined compared to the prior month given both declines in the delinquency and special servicing rates.

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By property type, the delinquency rate for office increased to 2.74%, compared to 2.18% in the prior month. The increase in office delinquency was carried by two loans secured by Chicago office buildings — 181 West Madison and 135 South LaSalle. The $100 million 135 South LaSalle loan defaulted after the collateral property’s largest tenant, Bank of America, vacated at lease expiration. The $240 million 181 West Madison loan became delinquent following the bankruptcy filing of the loan sponsor, HNA Group.

Lodging continues to have the highest delinquency (9.71%) and special servicing (14.16%) rates among property types, followed by retail delinquency (7.52%) and special servicing (12.23%) rates. Both lodging and retail exhibited improvements compared to the prior month, which is a trend that has been consistent over the past year as those loans continue to be worked out and resolved.

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CRED iQ’s overall distressed rate (DQ + SS%) by property type increased for office and self-storage increased, while lodging, retail, multifamily, and industrial declined.

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