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CRE Distress Accelerated in 2023’s Second Half 

Commercial real estate distress accelerated in the second half of 2023, according to analytics firm CRED iQ. The pace of loans being added to the servicer watchlist was roughly 110% faster compared to the first six months of the year. 

As of the December 2023 remittance reports, 15,373 loans were added to the servicer watchlist in the second half of 2023, representing nearly $100 billion of loans. In that same six-month period, 860 loans were transferred to the special servicer. The servicer watchlist total for the year was 23,085 loans. 

In total, more than $133 billion of loans were added to the watchlist in 2023, CRED iQ reported.  This compares to approximately $25 billion that transferred to special servicing. 

An example is a $525-million loan, including $143 million in subordinate debt, that was added to the servicer’s watchlist last September due to concerns with its second largest tenant, WeWork. The loan is backed by the Midtown Center (pictured), an 867,654-square-foot office tower in downtown Washington, DC. Fannie Mae’s headquarters lease accounts for 82% of the gross leasable area; however, the GSE plans to exit its lease five years early

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CRED iQ

About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 16-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 7-10 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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