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CMBS Delinquencies Spiked In May

Commercial mortgage-backed security delinquencies surged in May, ending the month at 7.15% delinquent, a major leap from the 2.66% rate recorded during the same period last year.

That is also up 486 basis points compared to the end of April, according to a new report by Trepp. The jump was the largest since Trepp started tracking the metric in 2009, the report said. The rate would have been higher, perhaps as much as 10%, except that some loans have received forbearance from lenders for now.


Office, industrial and multifamily loan delinquency rates were still relatively low in May, the report found: 2.4% for office, 1.82% for industrial and 3.25% for multifamily.

Retail loan delinquencies, by contrast, ended May at 10.4%, and hospitality loan delinquencies totaled 19.13%.

“Retail and hotels remain at the forefront of concern,” Manus Clancy, head of research at Trepp, told the Financial Times. “We saw delinquencies really ratchet higher in May and we expect more delinquencies in June.”

Much of the total still represents loans that are more than 30 days late but less than 60 days, Trepp reported. Loans that are seriously delinquent, over 60 days or in foreclosure or otherwise nonperforming, totaled 2.17% at the end of May, up only 6 basis points from April.

The percentage of CMBS-associated loans in special servicing also jumped, Trepp noted, from 4.39% in April to 6.07% in May, with a large number of these associated with hospitality and retail properties. 

In May, 16.2% of lodging loans were in special servicing, up from 11.4% the month before, while 9.3% of retail loans were, up from 6% in April.

Moody's Investors Service reported in May that about $32B in CMBS were in special servicing. Most were hotel and retail loans that slipped into delinquency as the coronavirus pandemic essentially shut down the travel industry.