CMBS Delinquencies Continue to Drop: Trepp

The delinquency rate has been creeping downward since a surge in May and June.
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The Trepp CMBS delinquency rate declined to 8.92 percent in September, marking the third month in a row that the rate fell.


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The September decline was welcome but modest, at only 10 basis points from the August figure, while the overall national CMBS delinquency rate rose 641 basis points year-over-year. Further, Trepp cautioned that “with relief windows ending for some loans, an uptick in delinquencies in the future is possible.”

Other indicators in the October report trended a little less favorably. Loans with a special servicer were up 44 basis points to 10.48 percent. Loans on the servicers’ watchlist were up from 19.9 percent in August to 20.7 percent in September.

But loans considered seriously delinquent (60 or more days delinquent, in foreclosure, REO or nonperforming balloons) decreased by 29 basis points from August to September. 

The context—and contrast —for Trepp’s relatively good news was that the delinquency rate had jumped in May and June, to a near record. The all-time high of 10.34 percent was registered in July 2012. The remarkable pandemic-related increase caused Trepp to ponder, in a report at the time, whether the rate might have reached “terminal delinquency velocity.”

Class by class

Unsurprisingly, delinquency rates and other indicators varied hugely by property type. In all, 26.0 percent of hospitality loans were with a special servicer, up from 25.0 percent in August. Retail, too, was hit hard, with 18.3 percent of loans in special servicing, for an increase of 1.0 percentage point from August. When we include the loans that are on the servicers’ watchlist, those numbers grow to a stunning 69.8 percent for hotel loans and 40.1 percent for retail loans.

So far, overall delinquencies among commercial mortgage-backed securities secured by multifamily and office properties remain roughly in the 2.3 percent to 3.0 percent range, and industrial is almost unscathed with a delinquency rate barely breaking 1.0 percent.

Read the full report by Trepp.