Matthew McGovern
Director, GRS Group
(646)760-0851
[email protected]
At GRS Group, we periodically check in on the status of the CMBS market, and the reports have been favorable for the most part, and June was no different.
Fitch reports a continued decline in delinquencies through the month. The ratings agency said that they dropped nine basis points, to 2.72 percent, from 2.81 percent in May. Fitch predicts the year to end in the 2.25-percent-to-2.75-percent-range. It is tracking 641 loans that have been delinquent for 60 days, or in worse shape, totaling $10.6 billion, compared to the overall $387.9 billion in total rated loans.
Meanwhile, resolutions of CMBS loans were at $630 million, which was higher than the $365 million in delinquencies rated by Fitch. There are now reportedly under $9 billion of maturities due for the remainder of the year.
By property sector, only multifamily and retail had a month-over-month increase in delinquencies. The good news for multifamily is that, even with the rise, it was the lowest of any asset class, rising from 0.44 percent to 0.46 percent.
Meanwhile, retail hit 5.64 percent, from 5.54 percent. The largest delinquency in that sector was referred to as the Central Mall portfolio, owned by Gregory Greenfield & Associates, which is made up of three properties in Oklahoma and Texas, accounting for a $110.2-million delinquency.
Office saw the best month-over-month performance, dropping 35 basis points, to 3.8 percent. The biggest resolution in that property sector was in St. Louis, which was the 43-story Metropolitan Square, and accounted for $124.1 million.
Hotels experienced a 15-basis-point drop, down to 2.44 percent. The largest-reported delinquency in that sector was in Norwalk, Conn., for the former Dolce Norwalk hotel, which is now being converted into lofts. The amount of that resolution was $22.4 million.
Mixed-use assets saw a decline to 2.46 percent, from 2.58 percent, while industrial was down to 2.48 percent, from 2.6 percent.
In large-issuance news, a portfolio of La Quinta hotels received a $1-billion CMBS loan at the end of June, in a deal done by J.P. Morgan Chase. The 300 hotels are owned by a newly formed real estate entity called CorePoint Lodging, which was reportedly created after a merger between La Quinta and Wyndham Resorts & Hotels.
On the office front, Greenfield Partners reportedly secured a $270-million loan for 3.9 million square feet spanning over 69 assets in Florida, Maryland, New Jersey and Pennsylvania.
With lower delinquencies, and some major new issuances, the CMBS market appears to be in a good place right now, and we hope to report even better results by the end of the year.
About GRS Group:
GRS Group is a leading provider of commercial real estate (“CRE”) services worldwide. With offices across the United States, Europe, and affiliates around the globe, GRS Group provides local market knowledge with a global perspective for institutional real estate investors, occupiers and lenders worldwide. The GRS Group team has evaluated and advised on over $1 trillion in CRE transactions.