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CRE Delinquencies Flat Overall in Q1, But Office Late-Pays Continue Rising
Delinquency rates overall for mortgages backed by commercial properties were unchanged during the first quarter of 2024, but loans backed by office properties continued to see a rise in delinquencies. That’s according to the Mortgage Bankers Association’s (MBA) latest commercial real estate finance (CREF) Loan Performance Survey, which also reported increases in lodging and industrial delinquencies.
“While overall delinquencies remained flat, the delinquency rate for loans backed by office properties rose again during the first three months of this year,” said Jamie Woodwell, MBA’s head of commercial real estate research. “Loans across property types are adjusting to higher interest rates and uncertainty about property values, but the continued fog around the impact of hybrid work adds another challenge for office properties and their loans.”
He continued, “The commercial real estate market is large and diverse, with a wide mix of property types, geographic markets and submarkets, property and loan sizes, owners, lenders, vintages, and other characteristics. With 20% of the $4.7 trillion of outstanding commercial mortgage debt maturing this year, each of those factors will play a part in determining which loans may face challenges and which may not.”
Office delinquencies ticked upward by 30 basis points from Q4 2023 to 6.8% as Q1 ended, according to MBA. Lodging delinquencies rose 20 bps to 6.3%, while industrial delinquencies were up by 30 bps to 1.2%. Retail delinquencies declined 30 bps to 4.7%, while those for multifamily were unchanged at 1.2%.
- ◦Financing
