Home Real Estate Office Accounts for Nearly 75% of New CMBS Distress 
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Office Accounts for Nearly 75% of New CMBS Distress 

CMBS loans totaling $2.1 billion were added to the distress rate in November, with office accounting for nearly three-quarters (74.6%, $1.6 billion) of the newly distressed loans, Kroll Bond Rating Agency reported this week. A 116-basis point rise in office CMBS delinquencies to 8.84% offset continued improvements in retail and lodging delinquencies. 
KBRA said a majority of the office special servicing transfers this month were not driven by imminent or actual maturity default, as was the case in prior months, but by term defaults—including those where borrowers sought relief well in advance of maturity.  

Of the 26 newly distressed office loans this month, 15 (57.7% by count) have maturity dates that are more than a year away, KBRA reported. This month’s office transfers include 230 Park Ave. ($670 million in MSC 2021-230P) and 40 Wall St. ($122.6 million across three conduits), along with mixed-use properties like 750 Lexington Ave. ($123.6 million across two conduits), which have a meaningful office component as part of the collateral. All three properties are located in Manhattan.
Overall, the delinquency rate for KBRA-rated U.S. CMBS climbed 19 bps in November to 4.4%, up from October’s 4.21% rate. The total delinquent and specially serviced loan rate–i.e., the distress rate—experienced a larger increase of 35 bps to 6.88% from October’s 6.53%, KBRA said this week. 

Pictured: 40 Wall St.

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