Trepp LLC

08/02/2021 | News release | Distributed by Public on 08/02/2021 13:02

CMBS Week in Review: CMBX Spreads Widen; Troubled Retail Loans Await Their Fate

Last week, the CDC updated its mask-wearing guidance and recommended that vaccinated people resume wearing masks indoors. More employers delayed returns to offices, began requiring employees to be fully vaccinated, or wear masks and maintain social distancing measures before letting them return to their offices.

Second-quarter GDP came in at 6.5% growth, up slightly from a 6.3% growth rate in the first three months of the year, according to the Commerce Department last Thursday. The reading was below economists' estimates, but pushed the size of the economy above its pre-pandemic level, a milestone that underscores the speed of the recovery that began in May 2020.

What had been a month-long rally came to a close Friday as the bell sounded in July. To end the week, the S&P 500 fell 23.89 points (0.5%), while the Dow Jones fell 149.06 points (0.46%) and the Nasdaq fell 105.59 points (0.7%).

CMBS Market Overview

The three largest BWIC listings for the week were between $58 million and $535 million (combined notional amount), according to data from Solve Advisors. The retail and office sectors saw large amounts of paper go out for trading, with more than $4 billion being offered between them.

CMBS cash spreads widened down the stack this week. Spreads grew between a basis point to ten basis points wider. CMBX 6-14 AAA spreads climbed by as much as one basis point, while CMBX BBB- spreads widened by as much as 55 basis points.

Retail Loans in Purgatory

Over the last three months, more than $3 billion in retail loans have been added to what Trepps' Senior Managing Director, Manus Clancy has called the retail 'purgatory' category. Loans that exist in this limbo period are neither going through the foreclosure process nor have been refinanced, meaning the lender is awaiting initiation of the foreclosure proceedings. The Trepp team highlighted a list of eight retail loans that find themselves in this category, seven of which are malls. Read more about retail loans in purgatory.

The TreppWire Podcast

In the latest episode of The TreppWire Podcast, we cover trends from the latest COVID-19 vaccine mandates and behind the tech giants' and REIT earnings reports. We also dive into some key stories including how certain retail closures can impact a mall, more office lease and tenant moves, and the rise in hotel occupancy. Finally, we cover the latest news on the Eviction Moratorium and give a sneak peek at our secondary MSA rankings and delinquency report. Listen here.

New Conduit Issuance

Top Credit Stories from the Week

Trepp's Credit Stories are originally published in our daily client newsletter, TreppWire. If you are interested in seeing coverage of credit stories in your inbox every morning, clickhere.

Lease Renewals Coming for 2016 Single-Tenant Office Loan(COMM 2016-COR1)- According to recent servicer watchlist notes for the $15.9 million GM Office Buildingloan, the leases to the property's sole tenant are close to being extended. The collateral is a 200,000-square-foot office in Warren, MI. GM is the sole tenant with two leases. One expires in September and the other in December.Shopping Center Behind CMBX 6 Retail Loan Sold (MSC 2012-C4) - Horizon Park, a 215,713-square-foot shopping center at 3904 West Hillsborough Avenue in Tampa, FL, was acquired by an undisclosed buyer, according to REBusiness Online. This is good news for bondholders of a 2012 CMBS deal and CMBX 6 longs. The property was constructed in 1971 and renovated in 1988. The address backs the $11.7 million Horizon Park Shopping Center loan which makes up 2.18% of MSC 2012-C4. That deal is part of CMBX 6.

Lease Renewal Close for Retail Property Behind 2013 Loan? (JPMCC 2013-LC11) -First-time watchlist comments for the $14.75 million The Cornerloan reveal that the top tenant at the collateral is close on a lease extension. The collateral is a nearly 80,000 square-foot retail property in Tucson, AZ. Nordstrom Rack is the top tenant with 42.1% of the space on a lease that ends in October. A lease extension has been submitted for approval. The property was built in 2008.

Previously Modified 2011 Loan Goes Delinquent Again (JPMCC 2011-C3) - July remittance data revealed that the $52.4 million Sangertown Square Mall loan is now 30 days delinquent. The loan was delinquent for a long stretch in 2020. However, as we noted in November, the loan was modified allowing the note to cure. (The modification included a three-year extension.) Recently, special servicer comments noted that the cashflow waterfall was not enough to keep the loan current and that the borrower elected not to cover the shortfall.

Apparent Modification Brings Big FL Hotel Loan Current (MSBAM 2015-C27) - With the re-opening of the US economy and the re-emergence of US vacation travel, it was assumed that debt service relief for hotel loans would tail off. That may be the case, but this is still taking place periodically. The $54.4 million Crowne Plaza - Hollywood, FLloan is a case in point. The loan had been 90+ days delinquent since the summer of 2020. This month, the loan was brought current. However, the paid to date on the loan remained anchored to October 2020 - so it would appear that there has been an accommodation made by the special servicer.

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.