CRE servicers ‘increasingly aggressive’ toward distressed assets: CRED iQ

Core Insights - The Trepp CMBS special servicing rate increased by 20 basis points month-over-month (MOM) in January to 10.91%, primarily driven by the office sector, which rose 47 basis points to 17.11% [3] - CRED iQ reported a distress rate across all commercial real estate (CRE) sectors of 11.98% in January 2026, marking a 148% increase over the past 43 months [4] - The increase in distress rates is attributed to monetary tightening, weakened property fundamentals, and a challenging refinancing environment [5] CMBS Delinquency Rates - Multifamily sector experienced a 30 basis point increase in CMBS delinquencies to 6.94% MOM, up from 6.15% six months ago and 4.62% a year ago [7] - The overall Trepp CMBS delinquency rate rose by 17 basis points MOM to 7.47%, with the office sector reaching an all-time high of 12.34% [7] - Retail delinquencies increased by 12 basis points to 7.04%, while lodging saw a significant drop of 105 basis points to 5.56% [7] Special Servicing and Workout Strategies - The multifamily CMBS special servicing rate increased by 6 basis points MOM to 8.14%, down from 8.37% six months ago [7] - Among the $40.1 billion in specially serviced CRE loans, the prevalence of liquidation-focused strategies indicates a belief that many troubled assets cannot be salvaged under current market conditions [5][6] - The breakdown of workout strategies includes foreclosure (39.1%, $15.7 billion), note sales (18.7%, $7.5 billion), loan modifications (20.3%, $8.1 billion), and REO properties (12.7%, $5.1 billion) [8]