NEW YORK–After a modest improvement in the delinquency rate in August 2023, delinquencies on commercial mortgage backed securities (CMBS) moved higher again in September, according to Trepp.
Trepp, which compiles data around securitized mortgages, said the uptick in September was due to “another sharp increase in the delinquency rate for loans backed by office properties.”
All other major commercial property types saw only “modest moves,” Trepp said.
Overall, the delinquency rate rose 14 basis points to 4.39%. That is the second-highest reading since the end of the COVID-19 pandemic, according to the company.
Office Segment Sees Increase
“In the heavily watched office segment, delinquencies rose another 51 basis points and the rate for that segment is now 5.58%,” Trepp stated.
“Since the advent of the calculation, Trepp has not included delinquent loans that are past their maturity date but are current in interest payments in its headline number,” the company explained. “That is because a significant number of these loans involve borrowers who are currently in the process of finalizing extension options that are included in the loan agreement. However, there is a growing trend among borrowers choosing to forego these extension options.”
Trepp said that if it included loans that are beyond their maturity date but current on interest, the delinquency rate would be 5.17%, up from 5.01% from August.
The company noted its numbers assume defeased loans are still part of the denominator unless otherwise specified.
The percentage of loans in the 30 days delinquent bucket is 0.30% – up six basis points for the month.
The Overall Numbers
According to the Trepp data:
- The overall U.S. CMBS delinquency rate rose to 4.39%, an increase of 14 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, the company said.
- Year over year, the overall U.S. CMBS delinquency rate is up 147 basis points. Year to date, the rate is up 135 basis points.
- The percentage of loans that are seriously delinquent (60+ days delinquent, in foreclosure, REO, or non-performing balloons) is now 4.09%, up eight basis points for the month.
- If defeased loans were taken out of the equation, the overall headline delinquency rate would be 4.62%, up 17 basis points from August. One year ago, the U.S. CMBS delinquency rate was 2.92%. Six months ago, the U.S. CMBS delinquency rate was 3.09%.
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