Officed Up

The CMBS delinquency rate has reached a new high at the end of each month through the first half of this year. At the end of June, the rate was 9.62 percent, up from 9.43 percent last month and 9.07 percent one year ago. The amount delinquent increased to $44.75 billion in June, although the monthly increase was less than 1 percent. The amount delinquent movements have been negligible each month this year, ranging from an increase of 2.3 percent to a decrease of 2.4 percent. Despite the fluctuations, however, the amount delinquent at mid-year was actually 0.2 percent lower than where it was at the beginning of 2012.

Seven loans with principal balances greater than $100 million became delinquent in June, compared with two last month. Three were office loans, which helped drive the office delinquency-rate to a new record high of 9.68 percent. Office is the only major property type that continues to register new delinquency rate highs. It also has the highest amount delinquent, at $13.7 billion, or approximately one-third of the total delinquent amount. With few new jobs created, high vacancy rates and peak-rent leases rolling to lower market rents, we don’t expect any near-term improvement in CMBS office credit metrics.

All of the other property types hit their delinquency highs either in 2011 or earlier this year and have subsequently retreated. Multi-family and lodging delinquencies, which had been trending lower, both increased in June.

—Larry Kay is a director at Standard & Poor’s.

(CMBS delinquencies by property type; $ in billions)

Source: Standard & Poor’s,, Larry Kay, 212-438-2504