November was the fourth consecutive month of CMBS delinquency decreases, but office properties are still a concern heading into the next year, according to the latest delinquency index results from Fitch Ratings.
In November, CMBS late-pays dropped 15 basis points to 8.41% from 8.56%. New delinquencies that reached $1.8 billion were offset by $2.2 billion of resolutions.
Over half of all new delinquencies comprised office loans. Of the four most prevalent CMBS property types — office, retail, multifamily, and hotel — mortgages backed by office properties experienced the biggest percentage rise in delinquencies from October and in the last twelve months, Fitch reported
The rating agency has said that office properties with rolling rents would be responsible for rising number of new delinquencies.
Many weak office markets are contributing an outsized share to the overall office delinquency figure such as Atlanta (the biggest contributor), Phoenix, Dallas, Sacramento, Detroit, and Las Vegas. By contrast, loans backed by central business district (CBD) office properties from the strongest office markets are virtually absent from the index.
Delinquency rates by property type are the following: multifamily 15.71% (from 15.99% in October); hotel 12.66% (from 12.54%); industrial 10.34% (from 10.28%); retail 6.63% (from 6.83%); and office 6.56% (from 6.29%).