CMBS delinquencies rise on large loan problems

multifamily CMBS dleinquencies

Trepp reported that delinquency rate for multifamily commercial mortgage-backed securities (CMBS) loans moved higher in October, rising 79 basis point. However, the size of this increase was due to one large single-asset, single-borrower apartment loan becoming delinquent.

The overall CMBS delinquency rate also rose for the second straight month.

The history of the overall and multifamily CMBS delinquency rates as reported by Trepp since January 2020 is illustrated in the chart, below.

Trepp multifamily cmbs delinquency rates

Overall CBMS delinquency rate rises

For delinquencies, Trepp focuses on loans that are 30 or more days delinquent. The current CMBS delinquency report provides data through October 2023. While it only looks at CMBS loans, it breaks out results by the type of property covered by the loans.

The delinquency rate on loans on multifamily property was 2.64 percent, up from 1.85 percent in September. One year ago, the delinquency rate on CMBS loans for multifamily property was 0.85 percent.

Trepp found that the overall delinquency rate of CMBS loans in October was 4.63 percent. This is up from last month’s level of 4.39 percent.

Much of the commentary in this month’s report focused on the industrial sector where the delinquency rate leapt to 2.56 percent from a rate of only 0.30 percent last month. Trepp noted that all but 9 basis points of this rise was driven by a single large loan becoming delinquent.

The report noted that loans that are past their maturity date but are still current on their interest payments are not counted as being delinquent. However, if they were included, the overall delinquency rate on CMBS loans would rise to 5.48 percent from the 4.63 percent reported above.

Your property type may vary

The other property types whose CMBS loan delinquencies were examined by Trepp were lodging, office and retail.

Office CMBS delinquencies continued their steady rise, climbing to 5.75 percent from 5.58 percent last month and 5.07 percent the month before. Delinquencies on CMBS loans for lodging properties fell to 4.76 percent from September’s level of 5.27 percent, continuing a string of 3 monthly declines. Delinquencies on CMBS loans on retail properties fell to 6.55 percent from last month’s level of 6.92 percent.

The full Trepp report can be found here.