According to a report by Trepp, souring office loans were the main driver behind a 7.36% rise in CMBS delinquencies in November. The overall U.S. CMBS delinquency rate increased by 42 basis points to reach 6.4%, compared to just 4.58% at this time last year.
Office delinquencies saw an even larger jump, rising about 100 basis points last month and reaching a rate of 10.38%. This was largely due to several large office loans becoming newly delinquent, with office properties accounting for around 60% of the total increase in loan amount reported by Trepp.
The largest new addition to the list of delinquent loans was a $370 million floating-rate loan secured by AMA Plaza, an expansive property spanning over one million square feet located in Chicago’s bustling downtown area. While the building’s offices are currently well-leased, there is concern surrounding its floating coupon as SOFR rates have risen significantly since it was originated back in early-2021.
Multifamily and lodging also experienced monthly increases in their respective CMBS delinquency rates – up by approximately94 and83 basis points each – although both sectors still maintain considerably lower levels than that seen within the troubled office sector.
Pictured: Beacon Capital Partners’ AMA Plaza at330 N Wabash Ave., Chicago
