Spike in U.S. CMBS Delinquencies and Special Servicing in May Due to Coronavirus

New loan delinquencies and new loan transfers to special servicing within the Fitch-rated U.S. CMBS conduit universe increased substantially in May due to coronavirus. The majority of conduit remittances for May have now been reported and 30-day loan delinquencies increased exponentially, rising 12 times as much as April. This is consistent with Fitch's expectation the delinquency rate will increase over the next few months and peak between 8.25% and 8.75% by the end of third quarter 2020.

Based on 96% of the Fitch-rated U.S. CMBS conduit universe reporting for May, an additional $924 million, or 49 loans, were added to Fitch's delinquency index as 60 days delinquent. These delinquencies are expected to contribute nearly 20 basis points (bps) to Fitch's overall delinquency rate, which was 1.32% in April with $1.0 billion reported as 30 day delinquent.

Additionally, approximately $13.5 billion, or 733 loans, were newly categorized as 30 days delinquent in May; nearly 78% by balance were hotel and retail loans. Assuming the same 89% roll rate of 30-day delinquencies becoming 60 days that occurred from April to May, the overall delinquency rate next month could increase an additional 250 bps.

Fitch's delinquency index includes loans that are currently at least 60 days delinquent, in foreclosure or REO, or considered non-performing matured balloons. After factoring in resolutions and runoff within the portfolio in May, overall conduit delinquencies increased by approximately 10% to $6.7 billion from $6.1 billion in April.

By property type, the new conduit loan delinquencies for 60+ days and 30+ days in May are:

--Retail: $401 million (17 loans); $4.6 billion (239 loans);

--Hotel: $220 million (18 loans); $6 billion (345 loans);

--Office: $180 million (five loans); $646 million (31 loans);

--Mixed Use: $69 million (three loans); $1.5 billion (57 loans);

--Industrial: $24 million (two loans); $66 million (nine loans);

--Multifamily: $8 million (two loans); $785 million (46 loans);

--Other: $22 million (two loans); $50 million (six loans).

Based upon May reporting to date, an additional $3.3 billion, or 162 loans, were newly transferred to special servicing; 88% of these new transfers were hotel and retail loans. Overall, approximately $13 billion of the Fitch-rated conduit universe was in special servicing, up 27% from $10.2 billion in April. Of the $13 billion currently in special servicing, nearly two-thirds ($8.7 billion) was reportedly at least 30+ days delinquent.

By property type, the new loan transfers to special servicing include:

--Retail: $1.7 billion (61 loans); 51% of new special servicing loan transfers in May;

--Hotel: $1.2 billion (82 loans); 37%;

--Mixed Use: $273 million (eight loans); 8%;

--Office: $101 million (seven loans); 3%;

--Multifamily: $13 million (two loans); less than 1%;

--Other: $6 million (two loans); less than 1%.

Of the $1.8 billion in new retail loans transferring to special servicing in May, over 65% ($1.1 billion, 13 loans) are backed by regional malls. The majority transferred ahead of their scheduled loan maturities and/or the borrower has requested coronavirus relief. Four of these malls are operated by CBL, four by Pyramid and one each by PREIT, Washington Prime, Starwood, Simon and Wilmorite. The new mall transfers to special servicing are:

--$210 million Eastview Mall and Commons (Victor, NY; COMM 2012-CCRE4 and COMM 2012-CCRE5; loan matures in September 2022; mall is operated by Wilmorite);

--$182.7 million Holyoke Mall (Holyoke, MA; JPMCC 2011-C3; February 2021; Pyramid);

--$148 million Arizona Mills (Tempe, AZ; JPMCC 2010-C2; July 2020; Simon);

--$105.8 million Arbor Place Mall (Douglasville, GA; JPMCC 2012-C6; May 2022; CBL);

--$99.6 million Hamilton Place (Chattanooga, TN; GSMS 2016-GS3 and GSMS 2016-GS4; June 2026; CBL);

--$76.8 million Poughkeepsie Galleria (Poughkeepsie, NY; UBSCM 2012-C1; November 2021; Pyramid);

--$76.3 million Kitsap Mall (Silverdale, WA; WFRBS 2013-C15; July 2023; Starwood);

--$54.6 million West County Center (Des Peres, MO; JPMCC 2013-C10; December 2022; CBL);

--$53.7 million Sangertown Square (New Hartford, NY; JPMCC 2011-C3; January 2021; Pyramid);

--$27.2 million Valley View Mall (La Crosse, WI; JPMCC 2010-C2; July 2020; PREIT);

--$24.5 million Eastgate Mall (Union Township, OH; WFRBS 2011-C4; April 2021; CBL);

--$19.8 million Aviation Mall (Queensbury, NY; WFRBS 2011-C2; November 2020; Pyramid);

--$17.1 million Anderson Mall (Anderson, SC; MSBAM 2013-C8; December 2022; Washington Prime).

Contact:

Melissa Che
Senior Director, CMBS
+1-212-612-7862
Fitch Ratings, Inc.
300 West 57th Street
New York, NY 10019

Mary MacNeill
Managing Director, CMBS
+1-212-908-0785

Media Relations: Sandro Scenga, New York, Tel: +1 212 908 0278, Email: sandro.scenga@thefitchgroup.com

Additional information is available on www.fitchratings.com