Along with bank liquidity issues, CMBS delinquencies are an important sign of CRE health. Possibly more so because they show not just trouble on the horizon but already in the rear-view mirror. A new Trepp analysis suggests that sometime in May, the red flags were starting to unfurl.
The CMBS delinquency rate jumped by 53 basis points to reach 3.62%, the largest increase since delinquencies were over 3% in June 2020.
"The increase in May 2023 was driven by a huge spike in office delinquencies," Trepp wrote. "The office rate jumped 125 basis points to 4.02%. The last time the office rate was above 4% was 2018. At that time, many loans originated in 2006 and 2007 were still outstanding accounting for the high level. That is not the case currently."
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