CMBS Delinquency, Special Servicing Rates Increase

The commercial mortgage-backed securities delinquency and special servicing rates both increased in November, according to Trepp LLC and DBRS Morningstar.

Trepp said the CMBS delinquency rate inched up three basis points during the month to 2.99%. “The increase in the delinquency rate was only the fourth in the last 29 months,” the firm’s latest CMBS Delinquency Report said.

Most property types showed improvement, Trepp reported. Only the multifamily sector saw an increase. “Without the multifamily blip, the overall delinquency rate would have been lower in November,” the report said.

The CMBS delinquency rate is down 139 basis points compared to a year ago, Trepp said.   

DBRS reported the CMBS special servicing rate rose for the fourth consecutive month in November after falling for 22 straight months. The special servicing rate increased 29 basis points in November to 5.55%, its highest level since March 2022. But the overall special servicing rate stands 128 basis points below its November 2021 cycle peak despite the recent increase.

“Multifamily and office have driven the [special servicing rate] increase, as they’re the only property sectors that have seen an increase in their special servicing rates over the previous 12 months,” DBRS said in its November Remittance Report.

“Special servicing transfer volume continued to outpace loans sent to the master servicer for the fourth consecutive month,” DBRS said, noting more than $2.9 billion transferred to the special servicer in November, more than four times the balance of loans returned to the master servicer and the largest monthly increase since August.

DBRS reported distressed property sales declined in November as liquidation activity contracted to $262 million from $340 million in October.

“Our outlook for the 2023 maturity payoff rate isn’t much changed at roughly 60% because higher interest rates and a slowing U.S. economy will challenge refinancing maturing loans,” DBRS said.