New Record High for CRE Distress Rate in May
In a recent report by CRED iQ, the distress rate for commercial real estate (CRE) loans reached a new high for the third consecutive month in May, climbing 14 basis points to 8.49 percent. The CRED iQ team analyzed payment statuses and special servicing rates to compile this monthly distress update. The special servicing rate now stands at 8.09 percent, while the delinquency rate is at 5.8 percent based on data from May.
The hotel sector saw the largest increase in distress last month, with the lodging sector’s distress rate rising from 8.7 percent to 9.4 percent in May. One notable example of a recent hotel default is the Grand Wailea hotel, backed by a $510.5 million loan with an additional $289.5 million in mezzanine debt. The hotel failed to pay off its loan at the May maturity date, contributing to the spike in distressed rates within the hotel sector.
Retail reclaimed its position as the sector with the highest distress rate in May, with the office segment following closely behind. Industrial and self-storage sectors maintained low distress rates, while the multifamily sector saw a slight decrease in distress following a significant increase in April due to a default on a loan backed by Parkmerced in San Francisco.
CRED iQ’s distress rate considers delinquency rate and special servicing rate, encompassing loans that are 30-plus days past due or in special servicing. It is important to note that CRED iQ tracks various loan metrics separately for different types of CRE properties.
Mike Haas, the founder and CEO of CRED iQ, leads the team in analyzing and reporting on CRE distress rates to provide valuable insights for the industry.
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Biography:
Mike Haas is the founder and CEO of CRED iQ, a leading provider of commercial real estate data and analytics. With years of experience in the industry, Haas has established himself as an expert in monitoring and analyzing CRE distress rates to help investors and stakeholders make informed decisions. Haas’s dedication to providing accurate and timely information has contributed to CRED iQ’s reputation as a trusted source for CRE data.