CRED iQ’s Overall CMBS Failure Rate Shows Slight Decline in June

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CRED iQ’s overall failure rate decreased from 3.32% to 3.30% in June 2022

RADNOR, Pa., July 6, 2022 /PRNewswire/ — The CRED iQ delinquency rate for CMBS has decreased slightly over the past June 2022 payment period. Overall crime has declined consecutively every month since June 2020. The delinquency rateequal to the percentage of all delinquent loans with special management and delinquent loans without special management was 3.30%which compares to the previous month’s rate of 3.32%.

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By type of property, the crime rate increased in June for the office and industrial sectors. The delinquency rate for loans secured by office buildings is 1.72% at June 2022an increase from 1.60% the previous month.

Delinquency rates declined in the retail, accommodation and self-storage sectors. Retail continued to post the highest delinquency rate (6.01%) by property type for the third consecutive month after eclipsing the accommodation sector in April 2022. High-profile new defaults this month included a $85.2 million loan guaranteed by the Crossroads Center regional shopping center in St. Cloud, MN. The loan became 30 days past due in June 2022 but has been on special duty since October 2020.

CRED iQ special service rate (includes delinquent and non-delinquent loans) decreased month-over-month to 4.64% from 5.17%. The accommodation sector, which had a special services rate of 7.72%, posted the strongest month-over-month improvement of all property types. The retail sector had the highest special services rate (9.43%), weighted by relatively large mortgages backed by regional shopping malls. In one of the latest developments this month, the $210 million Eastview Mall and Commons loan transferred to special service on June 1, 2022. The borrower cited ongoing pandemic-related issues; however, the loan also has an impending maturity September 2022 maturity in an unfavorable refinancing environment.

The aggregation of the two indicators of distress – delinquency rate and special service rate – into a whole distress rate (DQ + SS%) is equal to 4.95% specially managed CMBS loans, delinquent or a combination of both. Distressed rates for all property types declined except office and industrial.

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SOURCE CRED iQ

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