CMBS

Delinquency trends split in Q3, with securitized and agency loans showing more strain while banks and life companies saw small improvements amid uneven vacancy and rent conditions.

Federal Reserve bank supervisors are monitoring community and regional banks' commercial real estate portfolios amid concerns over "lower commercial property values," the agency said. 

Overall, new 60-day-plus delinquencies totaled $2 billion, up from $1.69 billion in August, while maturity defaults accounted for half, or 51% ($1.05 billion) of new delinquencies.

The volatility pushed whole loan spreads wider and brought single-asset single-borrower commercial mortgage-backed securitization to a halt as lenders waited for clarity.

The residential market is expected to face challenges from stubbornly high mortgage rates and limited supply in 2025, particularly after Fed Chair Jerome Powell's comments on Wednesday indicating fewer rate cuts are coming.

Investors began pulling funds rapidly after it disclosed last month the departure of Chief Investment Officer Ken Leech amid Justice Department and Securities and Exchange Commission probes into its trading practices.

The unanimous decision reinstated a jury verdict in favor of a plaintiff worked in support of the institution's commercial mortgage-backed securities business.

The delinquency rate that Kroll Bond Rating Agency tracks improved last month but JER's recent Chapter 11 filing and 2024 forecasts suggest it's still under pressure.

Retail properties account for 44.1% of the pool, the collateral pool's largest portion. Multifamily, lodging office and other properties account for 12.5%, 11.5%, 8.9% and 23.0%, respectively.

WeWork, once valued at $47 billion, needs to slash costs and shore up its finances as it tries to continue operating.

The market appears strongly divided, as commercial real estate presents investors with stark choices and big risk-management decisions, often differing by region and by sub-sector.

It notched relatively higher returns after betting on asset-backed securities with a rotation out of mortgage debt and collateralized loan obligations.

The five-year notes benefit from overcollateralization equal to 35%, and will use the proceeds to repay a line of credit facility.

Real-estate owned assets sold in 2021 achieved 109% of the most recent appraised value, on average, compared with the 97% that the sales achieved, in 2020.

By property type, lodging assets led the way for total delinquencies, with 6.3%, while some 3.5% of the lodging pools were current and specially serviced.

About 30% of U.S. office buildings are at high risk of becoming obsolete as tenants’ tastes change in the hybrid-work era.

A nearly $1.9 billion commercial mortgage bond linked to a portfolio of office buildings owned by Columbia Property Trust Inc. and Allianz SE was delayed on Wednesday due to market weakness, according to two bond investors.

Office properties account for 60.8% of the pool, above the 41.2% average for 2020 deals, and above the 36.5% average for 2021.

Key retail vacancies, a drop in office occupancies, plus a combination of lower oil prices, a housing market oversupply — worsened by the coronavirus pandemic — caused loan-level performance issues.

The sponsors got the portfolio through multiple acquisitions from May through October.