Fitch Ratings reported that the overall U.S. CMBS delinquency rate inched higher in May, as new problem loans outpaced resolutions. The rate rose to 3.31% in May from 3.28% in April, reflecting a modest deterioration in performance across securitized commercial mortgages.
The increase was driven largely by new delinquencies on large-balance office and regional mall loans, which more than offset loans that were brought current or otherwise resolved. Despite this uptick, performance trends were not uniform across property types. Fitch noted that office, hotel and mixed-use loans actually posted monthly declines in their respective delinquency rates, indicating that distress is not rising evenly across the CMBS universe.
New 60+ day delinquencies accelerated in May, totaling $1.73 billion compared with $1.34 billion in April. Office loans represented the largest share of that new volume at 33%, or $562 million. Retail followed at 28%, or $474 million, while multifamily accounted for 20%, or $339 million, underscoring that income pressure and debt-service challenges are not confined to a single asset class.
The composition of new delinquencies highlights the ongoing influence of loan maturities. Maturity defaults made up 64% of May’s new delinquent volume, or $1.11 billion, indicating that a significant portion of loans are failing to refinance or repay at scheduled maturity. Term defaults comprised the remaining 36%, or $618 million, where loans that remained within their original terms nonetheless became delinquent.
On the resolution side, activity slowed month over month. Fitch recorded $1.54 billion of loan resolutions in May, down from $2.04 billion in April, suggesting that the pace at which troubled CMBS loans are being cured, liquidated or otherwise resolved has eased. Of the May total, $1.05 billion reflected loans that were brought current, returning to performing status within the CMBS pools.
Another $422 million in May resolutions came from loan liquidations, where collateral was sold or other terminal outcomes were reached, removing those assets from the securitized portfolios. The remaining $69 million involved loans that had previously been 60+ days delinquent but improved sufficiently to be reclassified as 30 days delinquent, resulting in their removal from Fitch’s 60+ day delinquency index.
For CMBS investors and lenders, the data illustrates a market in which aggregate delinquency is rising modestly, driven by maturity-related stress and concentrated exposures in office and retail, even as some sectors such as hotels and mixed-use properties show incremental improvement. The mix of new delinquencies, maturities and slower resolutions will remain a key focus as stakeholders evaluate credit risk across office, retail and multifamily CMBS collateral in the coming months.
