CMBS Delinquency Rate Shows Most Improvement Since COVID

CMBS delinquencies decreased 6.8% in February, a decline of 78 basis points over January levels, according to Trepp data released this week. The decrease represents the largest improvement in the rate since the COVID-19 pandemic began, and the rate has now decreased for eight straight months.

The CMBS delinquency rate in the US was 2.04% a year ago, before the pandemic began. Six months ago, the delinquency rate was 9.02%.

The percentage of loans that are more than 30 days delinquent is down 16 basis points for the month as well, at 0.58%. Around 2.3% of loans missed February payments but were within their grace periods at less than 30 days delinquent, a 77 basis point decrease. The percentage of loans with the special servicer decreased to 9.6%, a drop from 9.72% in January.

Both retail and lodging showed declines in delinquency rates, which Trepp Associate Research Manager Catherine Liu says can be seen as a positive for the market. In February, 24.2% of all lodging loans were in special servicing, down from 24.5% the previous month, and 16.7% of retail loans were with the special servicer, as opposed to 22.3% in January.

“This could be a reflection of continued vaccination progress, fiscal stimulus spending, and the strong economic growth we are currently seeing in the first quarter,” Liu said.

But as GlobeSt has previously reported, many distressed retail and hotel properties are still in forbearance, and those loans could slip into delinquency at any time, resulting in an increase in CMBS delinquencies or default pressures.