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S&P: Seriously delinquent CMBS loans building up

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S&P Global Ratings reports that while the U.S. CMBS delinquency rate decreased last month, the level of seriously delinquent loans has climbed sharply.

In a new report, S&P noted that the proportion of loans past due over 60 days continues to grow, driven by property owners falling into serious delinquency from expiring forbearance agreements enacted at the onset of the coronarivus pandemic.

The share of 60-plus day delinquent loans is now 85% of all delinquencies. “as grace period levels sharply receded over the last couple of months,” reported S&P.

The amount of loans now past due over 120 days total $17 billion, accounting for 40% of all delinquent loans.

The increase occurred even as the overall CMBS rate fell 60 basis points month-over-month to 7.53% in October.

For the month, 160 new loans entered delinquency status totaling $4.56 billion, with higher rates recorded for industrial (1.42%), office (2.29%) and multifamily (2.19%) property types. Retail property delinquencies were down 14% in October, and hotel/lodging properties by 18.4%, although both types remain the predominant sectors accounting for most of commercial mortgage in forbearance or seeking forbearance (50.21%, or over $37 billion).

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But the overall dollar amount of delinquent properties decreased by $3.32 billion as loans cured. The total volume of delinquencies in 2020 is $45.33 billion.

About 7.27% of all CMBS-held loans are in forbearance or have made a forbearance request currently in progress, stated S&P.

S&P’s report contrasts that of Fitch Ratings (also issued last week) which noted a slight uptick in the delinquency rate last month for the universe commercial mortage-backed securities that Fitch tracks.

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CMBS Delinquencies Coronavirus MBS