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CMBS Delinquency Rate Skyrockets To Over 10% In June, Just Shy Of All-Time Record

The coronavirus pandemic spawned sharp increases in loan delinquencies in the commercial-mortgage backed securities market last month, but stayed below previous record highs.

Photo by Erik Mclean on Unsplash
The coronavirus has forced the closure of many retailers.

The CMBS delinquency rate on loans backing these securities hit 10.32% in June, a 317 basis point increase from May, according to new Trepp Analytics data. 

That is a 748 basis point rise from a year ago, when the CMBS delinquency rate was 2.84%.

The dramatic spike had Trepp analysts worried there could be a new record for delinquencies.

"At one point in June, it appeared that a new all-time high for CMBS delinquencies would be reached," Trepp wrote in its latest report. "However, when the final numbers were posted, the 2012 high [10.34%] remains the peak for the time being."

The June CMBS delinquency rate from Trepp is composed of 5% of loans that are 30 days delinquent and another 4.2% that are 60 days past due, Trepp said.

"The numbers could be headed still higher in July," Trepp said. "That's because 4.1% of loans by balance missed the June payment but remained less than 30 days delinquent."

The lodging and retail sectors make up a large part of the loans that are more than 30 days past due. Retail recorded an 18.07% CMBS delinquency rate in June, up from 10.14%, or 788 basis points higher than a month earlier. 

Lodging grew from a 19.13% delinquency rate in May to 24.3% in June, a 522 basis point increase.

The assets seeing less change in terms of delinquencies include office, multifamily and industrial, which reported delinquency rates of 2.66%, 3.29% and 1.57%, respectively, for June. 

Industrial delinquencies even fell from 1.82% in May to 1.57% in the most recent Trepp report.