In some good news for the commercial real estate industry this month, CMBS delinquencies continued to decline in February.
Ratings firm Fitch reported that the all-property 60+ day CMBS delinquency rate fell by 2 basis points month-over-month to 1.35 percent. The metric was at its lowest point since February 2009.
CMBS delinquencies went down in the office, industrial and retail sectors, in addition to mixed-use properties and sectors Fitch collectively classified as “other.”
However, both the hotel and the multifamily sectors experienced slight upticks in delinquencies. On Friday, Fitch published a report noting the outlook for hotel CMBS performance was changing from stable to negative, as it will be among the first property sectors to see the impact of coronavirus-related cancellations on cash flow.
Loans on office properties showed the most improvement in February, with CMBS delinquencies moving down 7 basis points, to 1.33 percent. Retail delinquencies went down by 6 points, to 3.59 percent (still among the highest figures in the real estate universe) and industrial delinquencies declined by 4 basis points, to 0.32 percent.
On the other hand, delinquencies on loans backed by multifamily properties rose by 3 basis points, to 0.41 percent, and on loans backed by hotel properties by 2 basis points, to 1.49 percent.
The property sub-sector that presented the biggest issue for the CMBS market was student housing. It posted the highest delinquency rate overall, at 4.59 percent, and registered the biggest month-to-month jump, at 56 basis points. The uptick was caused by two new sizeable loan delinquencies backed by student housing assets, according to Fitch. One involved a property near Texas A&M University and the other near Iowa State University.