**Morningstar Reports Drop in CMBS Delinquency Rate for October**
In a deviation from Trepp’s earlier findings this month, Morningstar Credit has reported a notable decline in the Commercial Mortgage-Backed Securities (CMBS) delinquency rate for October. The rate dropped by 40 basis points from the previous month, settling at 8.4%.
Morningstar’s delinquency calculation includes loans within three major categories: conduit, large loan, and single-asset single-borrower (SASB) transactions. Loans classified as delinquent include those with statuses such as “performing matured balloon” or “non-performing matured balloon.”
Among the property sectors, office loans experienced the most significant improvement with a 90 basis point decline in delinquencies. Despite this drop, office properties continued to hold the highest delinquency rate at 12.9%. Retail loans followed with a delinquency rate of 8.6%. In contrast, hotel and multifamily sectors both saw a 20 basis point increase in delinquencies over the month.
Meanwhile, the rate of CMBS loans in special servicing rose slightly to 10.8% in October, up from 10.5% in September. Hotel loans led this increase with a 60 basis point jump, while the office sector also saw a notable 30 basis point rise. Retail loans were the only category to post a decline in special servicing rates, falling by 60 basis points month-over-month.
