CMBS Delinquency Rate Maintains Downward Trajectory
The commercial mortgage-backed securities delinquency rate fell 10 basis points during March to 2.38 percent, driven by robust new issuance and few new delinquencies, reported Fitch Ratings, New York.
In addition, strong resolution volume–more than $810 million–continued into March, Fitch said in a non-rating CMBS commentary. New 60-plus day delinquency volume remained low, totaling $369 million in March, compared to $275 million in February. March’s 30-day delinquency volume also fell to $786 million from $832 million in February. Fitch-rated new issuance volume of $7 billion (six transactions) in February contributed to a higher index denominator.
Trepp Research Analyst Maximillian Nelson noted the CMBS special servicing rate fell 42 basis points in March to 5.66 percent. A ago the special servicing rate approached 10 percent.
“The largest cures in March continued to be concentrated in the lodging and retail sectors,” Nelson said, noting the lodging rate fell 100 basis points to 10.88 percent and the retail rate fell 102 basis points to 10.90 percent.
March represented the sixth consecutive month of declines in CMBS special servicing, Nelson said.
Fitch reported the hotel sector once again had the highest delinquency rate at 7.37 percent, followed by retail properties at 6.74 percent, the office sector at 1.30 percent, and both the multifamily and industrial sectors well below 0.5 percent.
Trepp Research Analyst Maximillian Nelson noted the CMBS special servicing rate fell 42 basis points in March to 5.66 percent. A ago the special servicing rate approached 10 percent.
“The largest cures in March continued to be concentrated in the lodging and retail sectors,” Nelson said, noting the lodging rate fell 100 basis points to 10.88 percent and the retail rate fell 102 basis points to 10.90 percent.
March represented the sixth consecutive month of declines in CMBS special servicing, Nelson said.
DBRS Morningstar, New York, said CMBS liquidation activity remains “subdued” by historical standards, as the volume of liquidated loans remained below $400 million for the seventh consecutive month and the weighted-average loss severity stayed below its historical average.
The DBRS CMBS Monthly Highlights report said the year-to-date maturity payoff rate exceeded 64 percent through March, “and we expect it to improve to roughly 75 percent by year-end based on improving metrics and a strengthening economy,” the report said. “Despite the ongoing uncertainty in the office sector, as the omicron variant continues to threaten plans for a full return to offices, accelerated virtual working trends may affect office demand less than commonly thought,” DBRS said. “Although employees may spend less time in the office, the need to accommodate peak office attendance limits the amount of potential reductions in space.”
