Mixed picture for CMBS in March

commercial lending

Two reports from Trepp give conflicting indications of the health of the CMBS market with one showing declining delinquency rates but the other showing rising special servicing rates.

CBMS delinquencies edge lower

One monthly Trepp report focuses on the portion of the loans that are 30 or more days delinquent. The current report provides data through March 2023. It only looks at CMBS loans but breaks out results by the type of property covered by the loans.

Trepp found that the overall delinquency rate of CMBS loans in March was 3.09 percent, down from the 3.12 percent level reported last month.

The delinquency rate on loans on multifamily property was 1.91 percent, up from 1.83 percent in February and from 1.56 percent in January. One year ago, the delinquency rate on CMBS loans for multifamily property was 1.53 percent.

The other property types whose CMBS loan delinquencies were examined were industrial, lodging, office and retail. Delinquency rates for industrial and lodging both improved slightly for the month. Industrial CMBS delinquencies fell from 0.40 percent to 0.37 percent. Lodging CMBS delinquencies fell from 4.45 percent to 4.41 percent. Delinquencies on CMBS loans for office properties rose to 2.61 percent, up from 2.38 percent in February and 1.83 percent in January. CMBS loans on retail properties had by far the highest delinquency rate in March at 6.23 percent, although this was down from the 6.75 percent rate reported for February.

CMBS special servicing rates edge higher

Trepp also issued a report on special servicing rates in March for CMBS loans. It found that the overall special servicing rate rose to 5.55 percent, up from 5.18 percent the month before.

Special servicing rates on CMBS loans on multifamily property rose to 3.04 percent in March, up from 2.70 percent in February and 2.28 percent in January. One year ago, this rate was 1.66 percent.

Special servicing rates on CMBS loans on industrial and lodging properties were within 1 basis point of the levels reported last month at 0.39 percent and 6.31 percent respectively. Rates on office properties rose 34 basis points to 4.48 percent while rates on retail properties jumped 84 basis points to 11.57 percent.

The full Trepp delinquency report can be found here while the Trepp report on special servicing rates can be found here.