03/01/2021 | News release | Distributed by Public on 03/01/2021 14:19
US stocks struggled at the week-end as investors grappled with rising yields on U.S Treasuries and a sharp sell-off in technology stocks. The 10-year Treasury closed at 1.513% on Thursday - its highest level in a year - on the back of positive economic data, increased vaccine supply, forthcoming stimulus, and the Fed's commitment to low-income rates and its 'easy-money' policies. Continued positive performance in the tech sector has investors concerned about company valuations, while higher yields will continue to keep those equities under pressure.
Economic reports noted that the number of weekly jobless claims came in at its lowest reading since November. Additionally, a Commerce Department report last Friday noted that household income rose 10% in January while consumer spending increased 2.4% - the first gain in three months.
CMBS cash spread movement was mixed for last week and was anywhere between eight basis points tighter and two basis points wider. For CMBX 6-14, however, spreads widened across the board: AAA spreads inched out between one and three basis points while BBB- spreads were out by eight to 40 basis points. While most of the newer CMBX 9-14 BBB- indexes posted more modest spread moves, CMBX 6, 7, and 8 BBB- spreads climbed by 12, 20, and 13 basis points, respectively. The brunt of the widening came from last Thursday's session in sympathy with the broader market sell-off that was triggered by concerns over rising interest rates.
The three largest BWIC lists that circulated last week had a combined notional amount between $340 million and $620 million according to Solve Advisors data. 2015-2019 conduit AAA IOs made up the bulk of the listings.
Secondary trading was active for the week with about $830 million out for bid between Monday and Thursday when agency and IO bonds are excluded.
Trepp's Manus Clancy spoke at JMBM's recent webinar: 'Update on Hotels in CMBS Special Servicing: What's Next in Round Two?' where he provided an update on loans in distress, and the differences from the Great Financial Crisis to what we have seen throughout the pandemic. See an outline of Trepp's presentation, including an overview of the current state of the market, a comparison to the Global Financial Crisis, as well as an overall breakdown by property type.
Department chain Belk petitioned for a pre-packaged bankruptcy last Tuesday and received court approval for a reorganization plan that involved $225 million in new capital infusion and trimming its debt load by $450 million. The firm's lenders and owner Sycamore Partners had unanimously agreed to these terms prior to the filing, which allowed Belk to emerge out of bankruptcy within a few hours. As another reminder, Trepp clients can access Belk's CMBS loan exposure on our In the Spotlight page. Contact us at [email protected] for more information.
In last week's episode of The TreppWire Podcast, Lonnie Hendry returned as we reviewed the latest market news. We gave an early look at changes in revenue and net operating income, delved into nuances in servicer data, discussed a rescue fund for hotels, and combed through more office news. On the retail front, we talked about more store closings and co-tenancy clauses. Listen here.
New Conduit Issuance
Top Credit Stories from the Week
Houston Apartment Loan Becomes 30 Days Delinquent(JPMBB 2015-C29) - According to February remittance data for the $30.7 million Alta Woodlake Square loan, the note became 30 days delinquent this month. The collateral is a 256-unit multifamily complex in Houston, TX. The property was built in 2013. For 2019, the loan posted a DSCR (NCF) of 1.19x when occupancy was 93%. Those numbers dipped to 0.91x and 90% for the first nine months of 2020.
Valentino's NYC Rent Dispute(JPMCC 2016-JP3 & more)- Back in June, we wrote that the New York Post reported that fashion retailer Valentino had sued the owner of its Manhattan Fifth Avenue location to be released from its lease. The firm cited the coronavirus' effect as the reason for the request. The story took a different turn recently when it was reported that Valentino has lost its bid and owes the owner of 693 Fifth Avenue a hefty $207 million.
Florida Hotel Headed for Consensual Foreclosure?(GSMS 2015-GC32)- According to new special servicer comments for the $23.3 million Doubletree Tallahassee loan, the borrower may be ready to turn over the keys. Prior to February, special servicer comments was 'continuing to discuss [a] potential forbearance with the Borrower' while simultaneously pursuing a foreclosure. This month's note seemed to indicate a forbearance is no longer part of the discussion.
2011 Mall Loan Heads to Special Servicing(GSMS 2011-GC3)- According to February remittance data for the $84.4 million Cape Cod Mall note, the loan has been sent to special servicing. The loan is slated to mature next month. Watchlist notes for January indicated that the borrower planned to refinance the loan at maturity - so hopefully this is a short detour.
Starwood Mall Portfolio to Lose Another Anchor(SRPT 2014-STAR)- According to Kiss95.1FM, the Dick's Sporting Goods at Northlake Mall in Charlotte, NC has closed. The mall is one of four backing the $681.6 million Starwood Mall Portfolio which fully comprises the single-asset SRPT 2014-STAR deal. The Northlake Mall is the third-largest of the properties and backs 23.6% of the allocated loan balance. Dick's was the largest tenant occupying 13.9% of the space on a lease that ended last month.
Originally published in TreppWire, which is distributed every morning as a client-only email newsletter. TreppWire enables readers to stay up-to-date on market activity, while providing a competitive advantage over others. TreppWire leverages Trepp's market expertise and proprietary data sets to provide daily market commentary, trend analysis, research, and breaking news to its clients.
Disclaimer: The information provided is based on information generally available to the public from sources believed to be reliable.