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CMBS Distress Metrics Continue Trending Downward

Metrics for distressed CMBS declined across the board in October, according to the Commercial Real Estate Finance Council. The overall 30+ day CMBS delinquency rate fell by 64 basis points to 4.6%, the largest monthly drop since February and the 16th consecutive monthly decline. 

The CMBS delinquency rate is now down 570 bps from its June 2020 peak. However, CREFC said it’s still elevated compared to the pre-pandemic level of 2.2% at the end of 2019, and the special servicing rate is still elevated at 7.2%, although down by 32 bps in October.. 

“The pandemic-related CMBS delinquency peak was similar to that reached during the Global Financial Crisis (GFC) at 9.8%,” according to CREFC. “Yet, unlike the GFC, pandemic-related delinquencies were quick to reverse course, falling 40% within 10 months.” 

REO asset volume has been significantly more muted during the pandemic than the GFC. The REO rate since the onset of the pandemic has remained consistent at ~1%, while the rate following the GFC eventually surpassed 3%. 

“The sharp declines in delinquent and special serviced loans suggest that pandemic-related REO volumes will continue the trend and be substantially lower than in the GFC,” CREFC reported. 

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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