Maturity defaults drive up delinquency rates
The rate of delinquent and distressed loans in US commercial mortgage-backed securities (CMBS) increased in May, according to the latest loan performance data from KBRA.
KBRA’s CMBS delinquency rate ticked up 4 basis points to 4.71% in May, while the total delinquent and specially serviced “distress rate” rose 16 basis points to 8.45%.
While most property types experienced a rise in the distress rate, the office sector saw a slight decrease of 28 basis points to 11.26%.
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The increase in the overall distress rate was largely attributed to CMBS loans totaling $2.2 billion becoming distressed. Over two thirds of that, or $1.5 billion, stemmed from imminent or actual maturity defaults.
The office sector accounted for the highest volume of newly distressed CMBS loans at 35.6% or $784.5 million, followed by mixed-use at 27.9% ($615.3 million) and retail at 23.3% ($513.5 million).
On the retail side, KBRA noted the $380 million loan on Bronx Terminal Market failed to pay off at maturity in May, while the $254.9 million loan on Providence Place Mall was transferred to special servicing due to imminent maturity default.
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The spike in distress for the mixed-use segment was “largely due to the transfer of the Bloomberg headquarters in 731 Lexington Avenue ($500 million in DBCG 2017-BBG), which had its ratings placed on Watch Developing earlier this month,” according to the report.
Despite the uptick in overall delinquency and distress, KBRA said the office sector got “a slight reprieve” from recent increases after the One Market Plaza loan modification.
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