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Retail-Backed Loans Pushed Overall CMBS Delinquency Rate Higher in October

The 30-day-plus delinquent rate went up by 38 basis points month-over-month for retail-backed loans.

It looks like the recent spate of store closings and bankruptcies might be having an impact on the delinquency rate for retail-backed CMBS loans, as well as the overall U.S. CMBS delinquency rate, a recent report from Trepp shows. In October, the percentage of retail-backed 30-days-plus delinquent CMBS loans increased by 38 basis points month-over-month, to 5.39 percent. The increase reversed a long-term trend of declining delinquencies in the sector.

It also nudged higher the overall CMBS delinquency rate for October, to 3.42 percent, a 1-basis-point uptick from the September figure. While that increase was minimal, it reversed six months of consistent delinquency declines.

Retail-backed CMBS loans also currently make up the largest percentage of loans in special servicing, at 39.9 percent of the total, according to a recent report from J.P. Morgan. Overall, there are 492 retail-backed CMBS loans in special servicing, with a total balance of $7.00 billion. Office-backed CMBS loans account for the second highest percentage of loans in special servicing, at 32.9 percent—or 253 loans with an aggregate balance of $5.76 billion.

As the retail sector faltered, the other core commercial property sectors continued to post declines in CMBS delinquencies in October. The lodging sector experienced the most significant month-to-month decrease, at 30 basis points, to 1.98 percent. Industrial CMBS delinquencies fell by 17 basis points, to 1.81percent, and multifamily delinquencies declined by 7 basis points, to 1.88 percent. CMBS delinquencies in the office sector declined by just 1 basis points from their September rate, to 3.93 percent. The office sector also currently has the second-highest overall delinquency rate, after retail-backed loans.

Overall, the U.S. CMBS delinquency rate in October still averaged 179 basis points below last year’s level.

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