Delinquency on securitized commercial real estate loans extended its improving run to four months, with performance on apartment loans leading the way. Delinquency on loans secured by healthcare properties nearly doubled in a single month, while hotel delinquency also surged.
September’s rate of 30-day delinquency on commercial mortgage-backed securities was 8.103 percent.
That was an improvement from August, when CMBS delinquency was 8.288 percent. Performance has improved each month since May, when the rate was 8.533 percent.
Last month’s past-due rate reflected $57.53 delinquent commercial mortgages out of $710.0 billion in CMBS rated by Morningstar Research.
CMBS delinquency was also better than in September 2011, when the rate was 8.182 percent.
Morningstar echoed concerns repeatedly brought up in prior reports that a large number of current loans could ultimately default because of the inability to secure adequate take-out financing at balloon maturity.
“A denial by special servicers of borrower requests for loan extensions, modifications or debt restructuring, or a decision by borrowers to surrender the collateral, is still a legitimate concern throughout the remainder of 2012 and into 2013,” the report said. “Based upon this concern and despite the ongoing liquidation activity experienced over the trailing 12-months, the delinquent unpaid balance for CMBS still has the potential to reach 9 percent as we enter 2013.”
The September improvement was bolstered by multifamily performance, with the multifamily delinquency rate tumbling to 5.7 percent from 6.4 percent a month earlier. Multifamily now has the lowest rate among all CRE categories.
Also declining was the retail property past-due rate — to 7.6 percent from 7.7 percent in August.
Like retail loans, mortgages secured by office properties saw delinquency fall 10 basis points, leaving September’s 30-day rate at 10.0 percent.
No month-over-month change was registered for industrial property loans, which finished September with an 11.1 percent delinquency rate.
One of two CRE categories to deteriorate was healthcare, with the 30-day delinquency rate lurching from 6.4 percent in August to 12.7 percent.
Morningstar Managing Director – CMBS Analytical Services Frank A. Innaurato explained in a telephone interview that the surge in healthcare delinquency was due to the small amount of healthcare loans rated by Morningstar; in August, 11 loans were delinquent out of 142 rated, while the past-due number was 12 in September. The newly delinquent loan was $0.1 billion out of a total of $1.7 billion in rated healthcare loans.
Delinquency on hotel loans jumped 60 BPS from August to 11.6 percent. The dollar amount of delinquent hotel loans was $7.9 billion.
