Late payments on securitized commercial mortgages continued to climb in November, as they have for eight of the last nine months.

The delinquency rate for U.S. commercial real estate loans in CMBS is now 5.03%, an increase of five basis points from October and the highest level since December 2015, according to Trepp.

The rate hit a multi-year low of 4.15% in February, but it began to rise in March, as 10-year loans taken out in 2006 and 2007 started to reach their maturity dates. CMBS loans amortize very little; the bulk of the principle must be refinanced upon maturity. But many commercial mortgages originated just before the financial crisis are proving difficult to refinance. In some cases, the value of the underlying property has fallen. In other cases, the properties are not generating enough income.

In November, CMBS loans that were previously delinquent but paid off with a loss or at par totaled about $800 million. Removing these previously distressed assets from the numerator of the delinquency calculation helped move the rate down by 18 basis points. Over $700 million in loans were cured last month, which helped push delinquencies lower by another 16 basis points. However, over $1.1 billion in loans became newly delinquent in November, which put 25 basis points of upward pressure on the delinquency rate. A reduction in the denominator due to the maturation of performing loans accounted for the remainder of the difference.

The current rate is now only 10 basis points lower than the year-ago level. At one point this year, the rate was showing a year-over-year improvement of 143 basis points. Since the beginning of the year, the delinquency reading is now 14 basis points lower.

The all-time high was 10.34% in July 2012.

The biggest deterioration was in the lodging delinquency rate, which increased 20 basis points to 3.63%. But lodging is far from the worst performing property type. The industrial delinquency rate jumped 14 basis points to 5.68%;the office delinquency rate rose 13 basis points to 6.57%; and the retail delinquency rate dipped slightly, falling one basis point to 6.18%.

Apartment loans are still the best-performing property type. The multifamily delinquency rate moved up nine basis points to 2.50%. 

The biggest newly delinquent loan was a $148,666,194 mortgage on the UBS Center, an office building in Stamford, Conn. The loan was securitized by the former Lehman Brothers and UBS in a 2004 transaction, LBUBS 2004-C1.  The building once housed part of UBS' Wealth Management business, but is only 73% occupied and is underwater, with a loan-to-value ratio of 198.19%.

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