CMBS Delinquency Rate Sees Largest Monthly Jump Since 2009

Analysts expected a jump in the commercial mortgage-backed securities loan delinquency rate during May, but few expected how big that jump would be.

Trepp Senior Managing Director Manus Clancy said his firm’s CMBS delinquency metric logged its largest increase in May “since we started tracking this metric in 2009.”

In April, Trepp’s CMBS Delinquency Rate registered 2.29 percent. The May reading equaled 7.15 percent, a 481 basis point jump. Much of that number came from loans in the 30-day delinquent bucket. Because nearly 8 percent of loans had missed payments for the April remittance cycle, the fact that delinquencies went up less than 5 percent in May could be viewed as a “small win,” Clancy noted.

Clancy warned the delinquency rate could increase again in June because more than 7 percent of loans by balance missed the May payment but remained less than 30 days delinquent. But he said as more forbearances are approved, some delinquent loans could revert to current status. “For instance, if a loan’s last payment was made in March, it would not show up as 60 days delinquent in June if a forbearance had been granted,” he said.

Fitch Ratings LLP, New York, agreed the CMBS delinquency rate increased across the board and in nearly every major property type.

The retail sector’s CMBS delinquency rate increased 37 basis points to 3.82 percent. Hotel loans saw a 49 basis point increase to 2.00 percent. The industrial and office sectors saw smaller increases of 3 basis points and 1 basis point, respectively. The multifamily CMBS delinquency rate held steady in May at 0.41 percent, Fitch reported.

May’s $766 million in new delinquencies significantly outpaced $101 million in resolution volume, Fitch said.

Fitch said it expects the delinquency rate will continue to rise over the next few months due to the anticipation that the vast majority of loans now 30 days delinquent will roll to 60 days delinquent and a higher volume of loans will transfer to special servicing.