CMBS Loan Delinquencies Tick Upward for Third Consecutive Month
CMBS loans rated by Kroll Bond Rating Agency (KBRA) saw an eight-basis point increase in delinquencies during December 2022. The delinquency rate increase to 2.97% marked the third consecutive monthly increase, although the rate is still below the year-end 2021 figure of 4.06%.
A total of $1.3 billion of newly delinquent loans were reported in the final month of 2022, the same level as November. By property type, multifamily (1.83%; +27 bps), retail (5.73%; +20 bps) and office (1.58%; +13 bps) reported delinquency rate increases for the month while mixed-use declined 20 bps to 3.61%
More than three-quarters of the delinquencies were reported as nonperforming matured balloons—up from 50% in November. In addition, of the $819.6 million transferred to the special servicer this reporting period, more than 80% identified imminent or actual maturity default as the reason compared to 70% the previous month.
KBRA said December’s maturity defaults and imminent maturity defaults were led by several large office loans, including:
$327.7-million Wells Fargo Center (MSC 2019-NUGS)
$243.6-million Republic Plaza (WFRBS 2012-C10 & WFRBS 2013-C11)
$130.0-million Federal Center Plaza (COMM 2013-CR6)
$103.7-million 515 Madison Avenue (WFRBS 2013-C11)
$98.2-million Gateway Center (JPMCC 2013-C10)
None of these loans were reported as delinquent during their respective terms, and the assets are geographically diverse, located in Denver, Washington, DC, New York City and Pittsburgh, respectively. KBRA said the refinancing difficulties likely stemmed from “capital market disruption owing to the uncertain interest rate and economic outlook, as well as ongoing concerns about remote and hybrid work’s impact on the office sector.”
Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces.
Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications.
Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).
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