Fitch Ratings-New York-06 August 2021: Fitch Ratings’ U.S. CMBS delinquency rate fell 22 bps to 3.59% in July from 3.81% in June, due to more loan resolutions, fewer new delinquencies and strong new issuance.
Resolution volume was strong, totaling $1.7 billion in July, up from $1.6 billion in June. Most resolutions were hotel ($958 million) and retail ($524 million) loans. Borrowers continue to bring loans current as property cash flows improve, although some are still receiving debt relief.
New delinquencies were $853 million in July, down from $1.0 billion in June. The roll rate of 30 to 60 days delinquent was 35% from June to July, compared with 39% from May to June. Thirty-day delinquencies rose to $2.5 billion from $1.7 billion; however, Fitch believes there is a reporting issue on one large loan.
Current and previous delinquency rates are as follows:
–Hotel: 13.61% (from 15.30% in June);
–Retail*: 9.14% (9.09%);
–Mixed Use: 3.63% (3.76%);
–Office: 1.47% (1.48%);
–Multifamily**: 0.49% (0.52%);
–Industrial: 0.18% (0.21%);
–Other: 1.28% (1.28%).
*Regional Malls: 15.98% (16.42%).
**Student Housing: 4.88% (5.15%).
Hotels accounted for the largest resolution last month, as the $231 million Hammons Hotel Portfolio (CGCMT 2015-GC33, GSMS 2015-GC34, GSMS 2015-GS1, CGCMT 2015-GC35) became current. The loan, which had been delinquent since June 2020, was modified in May 2021. Terms included the addition of two, one-year extension options, contribution of $30 million of new borrower equity to cover outstanding costs and replenish reserves, conversion of payments to interest-only and repayment of previously deferred amounts beginning October 2021.
The second-largest resolution was the $160 million Sheraton Grand Nashville Downtown loan (CSAIL 2018-C14, WFCM 2018-C48, MSC 2018-H4, MSC 2019-L2). Proceeds from the sale of the hotel in June 2021 were used to bring loan payments current in July after being at least 60 days delinquent since June 2020. The newly assumed loan is expected to return to the master servicer.
The largest new delinquency, the $106 million Plaza Mexico – Los Angeles loan (MSC 2016-UBS11, SGCMS 2016-C5, WFCM 2016-NXS6), defaulted at maturity. The loan, secured by a grocery-anchored retail property in Los Angeles, CA, transferred to special servicing in October 2020 for payment default and was brought current in December 2020. The borrower subsequently filed Chapter 11 bankruptcy in April 2021. The special servicer is evaluating next steps.
Although the overall retail delinquency rate rose in July, the regional mall rate fell 45 bps as three mall loans are no longer 60+ days delinquent. The $165 million Mall St. Matthews loan (Louisville, KY; $130 million in Fitch-rated GSMS 2013-GC13, $35.2 million in non-Fitch-rated GSMS 2013-GC14) and $129 million Meadows Mall loan (Las Vegas, NV; JPMBB 2013-C14, JPMBB 2014-C18) were brought current. The $86.1 million The Crossroads loan (Portage, MI; GSMS 2014-GC18) was reported as 30 days delinquent in July after being at least 60 days delinquent the prior 12 months.
July’s special servicing volume was $26.3 billion (1,089 loans; 5.1% of Fitch-rated U.S. CMBS universe), compared with $26.2 billion (1,116 loans) in June. Since the onset of the pandemic, $26.7 billion (848 loans; 5.2% of Fitch-rated universe) have received debt relief, up from $25.8 billion (830 loans) in June.
Fitch’s delinquency index currently includes 835 loans ($18.6 billion) with status of at least 60 days delinquent, foreclosure, REO or nonperforming matured. The current Fitch-rated U.S. CMBS universe includes 25,892 loans ($518 billion); $33 billion is defeased. The index excludes 30-day delinquencies, wireless tower, outdoor advertising and Canadian transactions and those seasoned less than one month. Fitch-rated new issuance of $9.2 billion (seven transactions) in June contributed to the higher overall index denominator.
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