CLOs’ Presence Increasing in CRE Debt Markets – Commercial Observer

CRED iQ expanded its commercial real estate collateralized loan obligations (CLOs) in late February with our research team exploring aggregated data by issuers to uncover opportunities and risks within this sector.  

We wanted to understand the percentage breakdown of delinquency/distress within these major CRE CLO issuers’ portfolios, and then measure the scale of those portfolios and their associated rankings within the group. Some core measures of our study examined the current deal balance outstanding, total delinquent loan balance and overall delinquency percentage. 

SEE ALSO: JDL Development and Wanxiang Score $160M to Build Condos in Juno Beach

MF1 earned the top spot in current deal balance outstanding category ($11.1 billion) while Arbor topped the category of total delinquent loan balance ($782 million) and placed second with current deal balance outstanding ($8.1 billion). In total, 9.6 percent of Arbor’s loans are delinquent, which earns it the No. 4 spot in this category.  

Leading the rankings by delinquent percentage is Starwood, with a whopping 12.6 percent of their portfolio delinquent.  Greystone and Fortress were not far behind with 11.2 percent and 10.7 percent, respectively. Starwood ranks third in total delinquent loan balance and 10th for current deal balance outstanding.

Top key findings from our study include:

• MF1, Arbor, FS Rialto, Ready Capital and Benefit Street have the highest amount of CRE CLO loans outstanding.

 • Out of the 21 largest CRE CLO issuers, MF1 and Ready Capital have the highest count of active deals issued with eight each.  

• Comparing deal sizes, MF1 has the highest amount with approximately $11.1 billion across eight deals, and FS Rialto has roughly $5.5 billion across their seven deals. 

• Performance-wise, TPG Real Estate Finance and FS Rialto have the lowest amount of delinquent loans when comparing the top 10 issuers by outstanding deal balance.  

• Measuring delinquent percentages of the largest 21 issuers, Starwood, Greywood, Arbor, Ready Capital and Varde Partners have some of the highest percentages.

Comparing delinquent loans by loan balance, Arbor, Ready Capital and Starwood have the most. The least amount of delinquent loans stem from deals issued by Blackstone, Prime Finance, Argentic, Bridge Investment Group and FS Rialto.  

Mike Haas is founder and CEO of CREDiQ.