Matthew McGovern
GRS Group
(646)760-0851
[email protected]
One of the biggest commercial real estate fears of a few years ago, the maturation of CMBS loans leading to mass defaults, hasn’t come to fruition in the way some predicted.
August marked the fourth consecutive month of a drop in delinquencies, down to 2.48 percent from 2.64 percent in July, according to Fitch Ratings. The firm cited continued new loan issuances and resolutions of pre-recession loans by special servicers as the main reasons for the decrease. There was $5.8 billion in new issuances in August, compared to $652 million in resolutions during the month.
There was only $115 million in delinquencies in August, the lowest figure since 2015. The largest one was $25.1 million for a mixed-use asset in New York City’s Manhattan Chinatown neighborhood for a mixed-use building at 55-59 Chrystie Street.
All of the Fitch-tracked commercial real estate sectors saw a decrease in August. Retail, with the highest delinquency rate, dropped from 5.6 percent to 5.31 percent, in part because of the resolution of $281 million in loans, including $77.6 million for Shadow Lake Towne Center, a 636,000-square-foot asset in Papillon, Neb.
The office rate fell from 3.69 percent down to 3.37 percent. Its resolutions totaled $260 million, including a $35.1-million loan for 1001 Frontier, in Bridgewater, N.J. Hotels dropped from 2.51 percent to 2.33 percent. Mixed-use assets stayed flat, at 2.26 percent. Industrial was down to 2.18 percent from 2.26 percent. Multifamily stayed put at 0.45 percent.
In its report for the month Trepp pointed out that the month could have gone worse had it not been for the debt of 666 Fifth Ave., in New York City, being paid off. Brookfield Asset Management reportedly paid $1.1 billion in rent to Kushner Cos. for rent so that the latter could pay off lenders. Brookfield now has a 99-year leasehold on 100 percent of the 1.5-million-square-foot office tower.
Trepp also had data on the biggest write-downs of August. The largest one was for $140 million on the Westfield Chesterfield mall, outside of St. Louis. Hull Property Group brought the failed mall in July for $13 million and plans to redevelop the center. The second-largest loss totaled $43 million for Liberty Plaza, a 371,505-square-foot shopping center in Philadelphia that once counted Dick’s Sporting Goods, Raymour & Flanigan, and Pathmark as tenants, and even Walmart five years ago. It sold for $10 million in August.
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.