CMBS Distress Rate Climbs to 8.62 Percent in June
The CRED iQ CMBS distress rate added 13 basis points (bps) in June to 8.62 percent — a nearly identical gain to May’s data and marking the fourth straight record high. The CRED iQ team evaluated payment statuses reported for each loan, along with special servicing status as part of our monthly distress update, and found CRED iQ’s special servicing rate remained mostly flat at 8.08 percent, while the delinquency rate gained 48 bps to 6.28 percent in the latest print.
Sector breakdown
The retail and office sectors continue to battle for the highest distress rates, notching 11.7 percent and 11.5 percent, respectively. Both sectors saw modest increases of 4 bps compared to the previous month.
The hotel sector held onto third place with an 8.1 percent distress rate, after logging the best month-over-month improvement of the group — shaving 130 bps from our June figures.
The multifamily monthly distress rate also increased — adding a modest 3 bps increase to 7.4 percent. Six months ago, the multi-
family distress number was 2.6 percent and it now challenges hotels for third place. Further, the distress rate for multifamily loans tied to CMBS financing has soared 185 percent since the start of the year.
Finally, industrial and self-storage have continued to operate at sub 1 percent for all but one of the last seven months.
Payment status
Looking at distressed loan payment statuses, 21.6 percent of loans are current — a reduction of 2.8 percent when compared to the June report. When factoring in 1.3 percent of loans and 4.7 percent of loans that were late but in the grace period, and late but less than 30 days, respectively, the combined metric saw a 4.3 percent decrease in current and near-current status.
Thirty-seven percent of loans were designated as non-
performing matured, a 2 percent month-over-month increase.The second largest distressed category were loans that were 90-plus days delinquent at 14.2 percent, a 1.4 percent dip from May, followed by performing matured at 13.5 percent, a 1.7 percent monthly increase.
Distress loan highlight
The 688,292-square-foot Equitable Plaza office property in the Mid-Wilshire submarket of Los Angeles is backed by an $87.1 million CMBS loan, which began amortizing in June 2019 after the initial five-year interest only period. Failing to pay off at its June 2024 maturity date resulted in a “nonperforming matured” status. No maturity extension options were available and — due to imminent default — the loan transferred to the special servicer in April 2024.
The central business district office property most recently performed with a debt service coverage ratio of 1.2 and 56.6 percent occupancy. At underwriting in March 2014, the asset was valued at $150.5 million (or $219 a square foot).
Mike Haas is the founder and CEO of CRED iQ.
