Real Estate
Distress in Commercial Real Estate CLO Loans Surged 480% in Last Year, Report Says
- CRED iQ report says distress levels climbed to 8.6% in January
- There are $80 billion of CRE CLO loans outstanding, firm says
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About 8.6% of commercial real estate loans bundled into collateralized loan obligation were distressed by one measure in January, a huge surge over the prior year’s proportion after borrowing costs surged, according to a report by analytics firm CRED iQ.
The distress rate is now 480% higher than in February last year, the data show. The borrowers typically used the debt to buy multifamily complexes, intending to renovate them and flip them at a profit, but many are now struggling with their floating-rate loans after interest rates increased.