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CMBS Delinquency Rate Logs Highest Increase Since Great Recession

Posted by: | Posted on: June 13, 2020

The  delinquency and special servicing rate for commercial mortgage-backed securities has logged the largest increase since the metric was introduced in  2009, according to a leading provider of data and analytics  on securitized mortgages. 

The delinquency rate for commercial mortgage-backed securities  rose to 7.15 % in May, according to the Trepp May CMBS Delinquency Report. Five percent of those troubled loans were identified as 30 days past due.  In May, $9.4 billion across 243 commercial loan notes were sent to special servicing, according to servicer and watchlist data compiled by Trepp. 

This month, initial reports of troubled commercial  mortgages are centered on single-asset or single-borrower deals, most backed by  hotels or malls, Trepp reported.

Trepp has identified four commercial properties across the  country with troubled loans to watch that are 30 days or more past due, in forbearance, held by a financial lending institution after an unsuccessful foreclosure sale, or in special  servicing.

  • The Lipstick Building, 903 3rd Ave., New York. The building’s $272 million loan was sent to special servicing in May for “imminent monetary default” after the ground lease tenant,  Ceruzzi properties,  defaulted on rent. The loan is  30 days delinquent.Wealth fund Shanghai Municipal Investments owns an 80% stake in the borrowing entity. 
  • Walden  Galleria, a  “super regional mall” in Cheektowaga,  NY.  The mall’s $246.6 million loan was  moved  to special servicing in April. The borrower’s request for federal COVID-19 relief is under consideration. 
  • Hudson Bay/SimonJV Portfolio, 9617 Wilshire Blvd., Beverly Hills, CA.  The $850 million loan, backed by 24 Lord & Taylor stores and 10 Saks Fifth Avenue stores across the nation. The loan’s special servicer contends that the borrower has engaged in a series of corporate maneuvers that reduced the CMBS bondholders’ credit protection. 
  • Ashford Office Complex, 951 Threadneedle St., Houston, TX. The  borrower has requested  forbearance relief for the $52.9 million loan, citing a disruption in operations  due to COVID-19.  Trepp reported that the loan has been struggling, in part because of low occupancy rates, since 2017. 

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