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CMBS Delinquency Dips But Expected to Worsen

An improvement was recorded in the performance of securitized commercial real estate loans, though deterioration is forecasted for next year.

As of Nov. 30 of this year, delinquency of at least 30 days on loans that are included in commercial mortgage-backed securities was 2.98 percent.

The 30-day rate moved down 5 basis points compared to the end of the previous month, when delinquency had moved higher by 13 basis points.

A far more significant improvement was made from a year previous, when the rate was 3.41 percent.

Morningstar Credit Ratings LLC reported the statistics based on the $790 billion in CMBS it rates.

Morningstar attributed the month-over-month improvement to “a nominal decrease in the balance of delinquent securitized commercial mortgages and a larger universe of loans.”

But the ratings agency warned that it expects the delinquency rate to worsen next year due to
a sharp increase in the volume of newly delinquent CMBS loans — many that it expects will default at or near maturity.

The improvement from October was led by securitized healthcare property loans, with the 30-day rate plunging 38 BPS to 2.19 percent.

A 24-basis-point decline left delinquency on industrial property CMBS loans at 4.55 percent as of Nov. 30.

At 0.45 percent, delinquency
was down 10 BPS from a month earlier on securitized multifamily loans.

The rate on retail property loans ended last month at 5.68 percent, down 9 BPS from the last report.

CMBS loans secured by hotels had a 30-day rate of 3.23 percent as of Nov. 30, retreating 6 BPS on a month-over-month basis.

The 30-day rate on securitized office building loans climbed 23 BPS to 6.02 percent as of the end of November.

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