NEW YORK–After a brief reprieve, delinquencies on commercial mortgage-backed securities (CMBS) have risen again.
Trepp is reporting the CMBS delinquency rate jumped back above 5% in June 2024, an increase it said was “somewhat expected” after May’s slight retreat, especially since the CMBS delinquency rate has been on an upward trend, increasing in four of the last six months.
Overall, the delinquency rate increased 38 basis points to 5.35%, according to Trepp.
“The net increase in delinquent loans in June across the five major property types was just shy of $2 billion, with the office sector accounting for half of the net increase,” Trepp stated. “There was roughly $1.87 billion in newly delinquent office loans during the month which was offset by roughly $900 million in office loans that were 30+ days delinquent in May but were no longer delinquent in June.”
According to the Trepp analysis, the other two sectors that posted large increases in their respective delinquency rates were retail and multifamily, accounting for 27% and 20%, respectively, of the $2 billion net increase in the overall dollar amount of delinquent loans in June. The analysis further found the retail sector had a roughly $525 million net increase in the volume of delinquent loans in June.
It’s All Malls
The four largest loans that became delinquent in June had balances greater than $100 million and were all malls, Trepp added.
“If we included loans that are beyond their maturity date but current on interest, the delinquency rate would be 6.54%, up 54 basis points from May,” Trepp said. “The percentage of loans in the 30 days delinquent bucket is 0.36%, up one basis point for the month.”
Trepp’s numbers assume defeased loans are still part of the denominator unless otherwise specified.
The Overall Numbers
According to Trepp’s latest report:
- The overall U.S. CMBS delinquency rate increased to 5.35%, an increase of 38 basis points for the month. (The all-time high on this basis was 10.34% registered in July 2012. The COVID-19 high was 10.32% in June 2020.)
- Year over year, the overall US CMBS delinquency rate is up 145 basis points.
- The percentage of loans that are seriously delinquent (60+ days delinquent, in foreclosure, REO, or non-performing balloons) is now 4.99%, up 37 basis points for the month.
- If defeased loans were taken out of the equation, the overall headline delinquency rate would be 5.57%, up 37 basis points from May.
- One year ago, the US CMBS delinquency rate was 3.90%.
- Six months ago, the US CMBS delinquency rate was 4.51%.
The CMBS 2.0+ Numbers
According to Trepp:
- The CMBS 2.0+ delinquency rate rose 32 basis points– to 5.18% – in June. The rate is up 149 basis points year- over-year.
- The percentage of CMBS 2.0+ loans that are seriously delinquent is 4.82%, up 31 basis points from the prior month.
- If defeased loans were taken out of the equation, the overall CMBS 2.0+ delinquency rate would be 5.40%, up 32 basis points for the month.
Overall Property Type Analysis (CMBS 1.0 and 2.0+)
Trepp reported the industry overview numbers show:
- The industrial delinquency rate increased 12 basis points to 0.62%.
- The lodging delinquency rate increased 10 basis points to 6.32%.
- The multifamily delinquency rate increased 66 basis points to 2.36%.
- The office delinquency rate increased 61 basis points to 7.55%.
- The retail delinquency rate increased 48 basis points to 6.42%.