CMBS Delinquencies Fall Slightly in November
Following 10 consecutive increases, CRED iQ’s overall distress rate for CMBS fell modestly in November by 5 basis points to 7.52 percent. There are important variables impacting these results —including some previously reported anomalies in the October data.
The core delinquency rate increased by 13 basis points to 5.27 percent — after recording a minor reduction in October. Similarly, our special servicing rate, which represents the percentage of CMBS loans that are with the special servicer (and includes both delinquent and nondelinquent loans), increased by 6 basis points to 6.84 percent.
Looking across the CRED iQ Distressed Rate Heat Map, the retail segment enjoyed its second consecutive month turning in an overall distress rate under 10 percent. On a month-over-month basis, however, retail overall distress increased by 35 basis points to 9.82 percent — putting a three-month, sub 10 percent trend on thin margins.
Industrial saw the greatest month-over-month distress increase from 1.81 percent to 4.53 percent. The industrial segment spent most of 2023 below 1 percent until October.
One significant factor behind the industrial distress numbers was the $2.2 billion industrial portfolio (BX Trust 2021-ACNT) that failed to pay off on its initial Nov. 9 maturity date, which caused the payment status to change from current to performing matured. There are three 12-month extension options, allowing for an extended maturity through November 2026. The floating-rate loan, which was originated in October 2021, is structured with an interest rate that equates to one-month LIBOR plus a 2.37 percent spread rate, which has now spiked to 7.82 percent. The sponsor of the loan, Blackstone, had its interest rate cap agreement expire
on Nov. 15, which had an original strike rate of 3.5 percent.
Lodging, multifamily and the well-watched office segments all trimmed their distressed rate modestly month-over-month.
Self-storage continued to dominate the overall delinquency rate performance at 1.33 percent, 2 basis points off the 2023 high of 1.35 percent. Self-storage logged three months with 0 percent delinquency, and most months in 2023 were in the single digits.
Nearly half of the delinquencies were categorized as nonperforming matured balloon. Approximately 25 percent were 90-plus days delinquent, and just below 20 percent were classified as performing matured balloon.
CRED iQ’s overall distress rate aggregates the two indicators of distress — delinquency rate and special servicing rate — into an overall distressed rate. This includes any loan with a payment status of 30-plus days or worse, and any loan actively with the special servicer, along with nonperforming and performing loans that have failed to pay off at maturity.
As with the October report, we caution that November’s results are inconclusive from a trending perspective. With that said, it is noteworthy that all but two defined segments logged reduced delinquency month-over-month (the other category saw an increase).
Mike Haas is the founder and CEO of CRED iQ.
