High Rates, Tighter Lending Conditions Push Office Loan Delinquencies To 5% in July

The number of borrowers having trouble staying current on their loans continues to grow, including in the office sector.

The delinquency rate for CMBS loans rose to 4.4% in July, but for office loans, that number reached 5%.

The rise in the number of delinquencies of these loans was attributed to both higher interest rates and tightened lending conditions, according to MarketWatch, citing Trepp data.

Office's delinquency rate reaching 5% puts it at roughly the halfway point to the historic 10.3% high for the entire CMBS sector, reached in July 2012 as the repercussions of the Global Financial Crisis reverberated. However, retail delinquency rates climbed higher, to 6.9% in July, and hospitality hit 5.9%, Trepp found.

Earlier this month, data from credit rating agency KBRA estimated the total of all newly delinquent CMBS loans as of this month was $12B. More than one-third of the loans that had become delinquent or entered special servicing in July were connected to office properties.

"While the rest of the U.S. economy has seen relief in terms of higher equity prices, better-than-expected corporate earnings, and falling inflation numbers, the commercial real estate (CRE) market continues to be left behind," Trepp analysts wrote in a Tuesday client note, MarketWatch reported.

In May, the overall delinquency rate was 3.65%, a majority of which was attributed to the office market.

Continue reading this story with a free account

Log in or register
Related Topics: CMBS Loans , Trepp
Sign up for more articles like this
Subscribe to Bisnow's National Newsletters
Related Stories

Wells Fargo Moves To Foreclose On $1.3B Workspace Property Trust Portfolio

Turner Construction Hit With Cyberattack, Hackers Claim Leaks Of Military Info, NDAs

Latest Round Of Fannie Mae Senior Staff Layoffs Has Multifamily Sector Anxious

Why Hines Is Restarting Its Development Engine

Cross Ocean Partners, Fuller Realty Acquire 829K SF Houston Office Campus

How Integrated Infrastructure Can Help AI Data Centers Deploy Faster, Build Smarter

Nvidia Buys Stake In Data Center Power Company

Invesco Cuts Fees, Adds Incentives To Quell Fund Redemption Requests

Investors Anchor Big Capital Into Marinas, Betting On Shallow Supply

NYC Office Investor Warns It Could Go Under As Defaults Pile Up

Deutsche Bank Takes 5 Floors At Oaktree And Quadrant's Canary Wharf Scheme

Nike Closes 15 Stores Amid Tumultuous Year