Trepp’s October report on CMBS delinquency continued the upward trend, increasing 28 basis points to 5.98%. And it all came down to the office sector.
Outside of office, all the CRE property types in CMBS loans either saw lower or unchanged delinquency rates. Office, however, leaped 101 basis points in a month, reaching 9.37%. Office properties were 60% of newly delinquent loans in October.
According to Trepp, the last time office delinquencies were this high was in 2012 and 2013 and overall CMBS delinquency hit 10.34% in July 2012. A main driver of the increase was a single large office loan, previously current, that went 30 days delinquent in October. All the split pieces — including a single-asset, single-borrower property — “reflected this newly delinquent status.”
The net increase in delinquent loans was $1 billion. There were $3 billion additional in total, but $2 billion had been paid off.
Looking at the rates by property types other than office, industrial was 0.32%, the same as in September. Lodging dropped from 6.23% to 6.09% over the month. Multifamily went from 3.33% to 3.24%. Retail dropped from 7.07% in September to 6.82% in October.
Over the last 12 months, however, delinquency rates for almost all property types were up sharply. Overall, it was 4.63% to 5.98%. Industrial, 2.56% down to 0.32%. Lodging had been at 4.76% and now was 6.09%. Multifamily grew from 2.64% to 3.24%. Office jumped from 5.75% to 9.37%. And retail edged up from 6.55% to 6.82%.
Trepp noted that if they had included loans current on interest payments but beyond their maturity date, the overall delinquency rate would have been 7.73%, up 58 basis points.
Delinquency status by loan status was 92.27% current, 0.43% 30 days delinquent, 0.11% 60 days delinquent, 0.58% 90 days delinquent, 1.75% performing mature balloon, 2.09% non-performing mature balloon, 1.82% in foreclosure, and 0.95% REO.
The percentage of loans that are seriously delinquent — meaning 60 days or more delinquent, in foreclosure, REO, or non-performing balloons — is 5.55%, up two basis points over September. Take out defeased loans and headline delinquency would be 6.21%, up 28 basis points month over month.