Eight newly defaulted loans worth over $100 million have entered special servicing, according to Fitch Ratings in its latest edition of What's in Special Servicing, a report on U.S. CMBS. The agency said that recent defaults include two hotel portfolios, Red Roof Inn and Extended Stay.
Since the rating agency's last update in April, $17.4 billion in Fitch-rated loans have entered special servicing, which includes the Extended Stay Portfolio, which by itself totals over $4 billion.
"Four of the 10 largest delinquent loans have experienced appraisal reductions as a result of value declines, indicating that losses may be significant in their respective deals," said Managing Director Mary MacNeill. She added that of over 2,000 specially serviced loans, 64 have balances that are above $100 million.
Property performance has not deteriorated considerably since the rating agency's last update among loans of concern such as the Riverton Apartments and Peter Cooper Village/Stuyvesant Town.
But. according to MacNeill, the 'cash flow from Riverton and Peter Cooper Village/Stuyvesant Town still requires significant reserves to cover debt service obligations, and these reserves will likely be depleted by the end of the year.'
Fitch has classified more than $75 billion or 18% of its rated U.S. CMBS portfolio as loans of concern. Additionally, recent vintage loans make up over 11% of the $75 billion.