Commercial real estate distress saw a significant increase in the second half of 2023, according to analytics firm CRED iQ. The pace of loans being added to the servicer watchlist was over 110% faster compared to the first six months of the year.
The December 2023 remittance reports revealed that a total of 15,373 loans were added to the servicer watchlist in this period, amounting to almost $100 billion. Additionally, there were 860 loans transferred to special servicing during this time frame. Overall for the year, there were a total of 23,085 loans on the servicer watchlist.
CRED iQ reported that more than $133 billion worth of loans were added onto their watchlist in all throughout last year. This is significantly higher compared with only about $25 billion that had been transferred into special servicing.
One notable example is a loan worth $525 million (including subordinate debt) which was placed on their list last September due mainly because its second largest tenant WeWork raised concerns regarding payment issues. The loan’s collateral is backed by an office tower called Midtown Center located at downtown Washington DC and spans across approximately around nearly one million square feet area (867k sq ft). Fannie Mae occupies around eighty-two percent gross leasable area; however they have plans set out already five years prior before lease expiration date .
The article “CRE Distress Accelerated in Second Half” originally appeared on Connect CRE.
