NEW YORK–With numerous rosy forecasts for the U.S. economy, at least one segment is continuing to feel stress: commercial real estate.
Analysis of the commercial real estate (CRE) market by Trepp, using the company’s “Anonymized Loan Level Repository,” found the balance of delinquent or non-current loans has continued to rise, with the lodging sector seeing the largest increase in the balance of delinquency loans among the commonly-tracked CRE property types during Q4 2020.
The lodging sector saw its balance of delinquent loans increase to $1.64 billion, up from just below $500 million in Q3 2020, Trepp reported.
“The total outstanding delinquent balance rose to $4.67 billion in Q4 2020 from $3.02 billion in Q3 2020 due to an increase in the number of delinquent loans backed by retail, lodging, and office properties,” the company said.
Trepp noted that while distress percentages among bank loans are still lower than that of the commercial mortgage-backed securities (CMBS) universe, the number of loans that are delinquent increased for the fourth quarter in a row. Roughly 1.28% of all T-ALLR loans were delinquent at the end of Q4 2020, a 20-basis point rise from Q3 2020. The number of non-current loans also rose 14 basis points from Q3 2020 to 0.94%.
When broken out by property type, delinquencies are concentrated in lodging, and retail, with delinquency rates in Q4 2020 coming in at 11.6% and 6.1%, respectively, for those two property sectors.