Late payments on securitized commercial mortgages climbed again in October, as they have for seven of the past eight months.
The delinquency rate for U.S. commercial real estate loans in CMBS is now 4.98%, an increase of 20 basis points from September, according to Trepp.
The percentage of seriously delinquent loans, those at least 60 days behind on payments, is now 4.87%, also up 20 basis points on the month.
The delinquency rate hit a multi-year low of 4.15% in February, then started to climb as more loans taken out in 2006 and 2007 proved difficult to refinance upon maturity. (CMBS loans generally have 10-year terms and amortize very little; borrowers repay the bulk of the principal in a final, balloon payment.)
The rate is now only 25 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.
However, it is still well below the all-time high of 10.34%, reached in July 2012.
In October, CMBS loans that were previously delinquent but paid off with a loss or at par totaled about $820 million. Removing these previously distressed assets from the numerator of the delinquency calculation helped move the rate down by 18 basis points. Another $500 million in once-delinquent loans were cured last month, which helped push delinquencies lower by another 10 basis points. However, over $1.9 billion in loans became newly delinquent in October, which put 42 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.
Late payments rose for all five major property types.
The delinquency rate on office loans, the worst performing property type, rose 11 basis points to 6.44%. The retail delinquency rate saw the biggest jump, added 30 basis points to 6.19%. The industrial delinquency rate jumped 26 basis points to 5.54%. The lodging delinquency rate increased 18 basis points to 3.43%. And the delinquency rate on apartment building loans, the best performing property type, moved up eight basis points to 2.41%.
