Over 30% of Chicago-area hotels with CMBS loans missed May mortgage payments

New data from Trepp found that increasing number of retailers and hotel owners can’t make their monthly payments

TRD CHICAGO /
Jun.June 18, 2020 10:11 AM
A new report in Trepp found delinquency rates have jumped for Chicago area hotels and retailers. From left, Palmer House Hilton and Gurnee Mills mall. (Wikipedia Commons)

A new report in Trepp found delinquency rates on CMBS loans from Chicago area hotels and retailers have jumped. From left, Palmer House Hilton and Gurnee Mills mall. (Wikipedia Commons)

Chicago’s economy is emerging from the long stay-at-thome order, but for many hotels and retailers with mounting debt, the outlook looks bleak.

The delinquency rate on loans packaged into commercial mortgage backed securities jumped to 8.8 percent in May from 3.1 percent in April, according to a new report by Trepp, cited by Crain’s. And data compiled so far in June shows that late payments will only get worse, the report noted.

Overall, the national delinquency rate on CMBS loans jumped to just over 7 percent in May, from 2.2 percent in April.
While the occupancy rate at Chicago hotels has slowly climbed up past 30 percent, so, too, has delinquency rates on CMBS loans, the report noted.

Alarmingly, the delinquency rate spiked to 33.5 percent last month for area hotels, from just 2.5 percent in April, signaling potential foreclosure for many in the industry.

Most special servicers have not sought that route yet, however, according to Crain’s; they are allowing borrowers to pull from their reserve accounts to make the mortgage payments.

Meanwhile, late payments for Chicago-area retail property CMBS loans stood at 13.4 percent in May, up from 7.8 percent in April. Malls owned separately by Simon Property Group and a KKR-led venture both missed May debt payments. The retail properties, Gurnee Mills and Yorktown Center, had both been closed because of pandemic-related restrictions. [Crain’s] — Alexi Friedman 


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