CMBS Delinquency Rate Up For The First Time In 18 Months

The delinquency rate for commercial mortgage-backed securities (CMBS) ended 2021 on a rare uptick, according to new data from Trepp LLC.

What Happened: The Trepp CMBS delinquency rate in December was 4.57%, a 19-basis-point increase from November and the first time in 18 months that the rate was up.

“After two huge increases in May and June 2020, the rate fell for 17 consecutive months,” said Manus Clancy, senior managing director at Trepp. “That stretch ended at the end of the year as several large office delinquencies contributed to the increase.

“In terms of loans in grace period,” Clancy added, “2.13% of loans by balance missed the December payment but were less than 30 days delinquent. That was up eight basis points for the month.”

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What Else Happened: Trepp reported that among the major office loans that became 30 days delinquent in December were 245 Park Avenue in New York City and 181 West Madison Street. The loans for the two properties totaled more than $1.2 billion and they became delinquent after PWM Property Management, an arm of the Chinese conglomerate HNA Group (the borrower under both loans) filed for bankruptcy.

Trepp also noted that the percentage of office loans with the special servicer moved up to 3.23% in December from 2.97% in November. In comparison, the percentage of retail and lodging loans with the special servicer were down in December. The total percentage of commercial property loans with the special servicer totaled 6.75% in December, down from 6.94% in November.

Photo: Ace Miel/Pixabay.