In October, CMBS distress saw a rise according to two different measurements. The Trepp CMBS Delinquency increased by 24 basis points to reach 4.63%, marking the highest reading since the end of the COVID-19 pandemic.
According to Trepp’s report, this increase was largely influenced by one large industrial delinquency which appeared as past its balloon date and not current on interest payments. This loan originated in 2021 and is backed by a single-borrower CMBS deal.
Despite this, there were also improvements seen in some property types while others showed increases in delinquencies based on data from Trepp for October. Lodging and retail delinquencies decreased by 51 and 37 basis points respectively while multifamily and office delinquencies rose with multifamily seeing a larger increase than office.
The overall distress rate for CMBS according to CRED iQ increased slightly by14 basis points reaching7.57%inOctober.This marks the tenth consecutive monthly increase this year.However,the coredeliquencyrateandthespecialservicingratebothshowedslightdeclines.Theindexforloans that are both delinquent or in special servicing continued an upward trend though.
CRED iQ reported that “a severely limited refinancing market coupled with an environment of ‘higher for longer’ interest rates continues contribute towards sustained increases in commercial real estate distress.” With no changes made during November’s meeting,the Federal Reserve has kept rates unchanged.Perhaps,this suggests that we may be approaching peak levels of interest rate hikes,but only time will tell.”
