Quarterly U.S. CRE CLO Report: Despite Strong Q1 2022 Issuance, Pricing Volatility May Curb Q2 2022 New Issue Volume
In this new quarterly report series, we highlight key metrics and trends for the commercial real estate collateralized loan obligation (CRE CLO) industry in the U.S.-- Q1 2022 CRE CLO issuance nearly totaled that of the previous quarter despite four fewer transactions. There were 12 new CRE CLO deals totaling $14.19 billion in Q1 2022, following 16 deals totaling $14.61 billion in Q4 2021.
-- More than 85% of the quarter's transactions by dollar balance were managed, with the static deals (no reinvestment period) coming in at just below 15% of the volume in Q1 2022.
-- Multifamily collateral continued to dominate in transactions, with 75.0% of all loans backed by apartments, student housing, and single-family rental communities. Loans backed by office properties remain a distant second at 8.7%.
-- After emerging in CRE CLOs as the post-pandemic travel environment began to take shape, hotel loan issuance dropped to about $225 million, down from more than $800 million in the previous quarter.
-- Pricing volatility in the later part of Q1 2022 has led many issuers to postpone transactions, accumulating a backlog that may push volume up toward the later part of Q2 2022 and into Q3 2022.
-- The delinquency rate tumbled 88 bps to 1.18% in Q1 2022 after rising above 2% in December 2021 for the first time since March 2021.
-- The special servicing rate has remained subdued, not surpassing 0.5% since May 2021.
-- As of the Q1 2022 reporting, the overall loan modification rate for CRE CLOs rose to 5.24%, an increase of 59 bps from 4.65% in the prior quarter, driven by office, mixed use, and multifamily.
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