Office CMBS Delinquencies Rise While the Overall Rate Falls
CMBS delinquencies declined slightly in March with the notable exception of loans backed by office, according to Trepp and Fitch Ratings. The office delinquency rate for Fitch-rated CMBS ticked up four basis points to 1.45%, while Trepp reported a 23-bp increase to 2.61%.
Helping drive up the office delinquency rate as measured by Trepp, especially in Colorado, was the $134-million Republic Plaza loan on a 1.3-million-square-foot office property in Denver. The loan transferred to special servicing this past November and failed to pay off at maturity, according to Trepp.
“Furthermore, even though lodging saw about a four-basis-point decrease in its delinquency rate, down to 4.41% from 4.45%, a couple of specific U.S. states saw spikes in the month-over-month change in their lodging delinquency rate,” Trepp reported.
Both Trepp and Fitch rank retail as the property type with the highest delinquency rate: 6.23% as measured by Trepp and 4.86% for Fitch-rated loans. However, Fitch reported a 39-bp decline in retail delinquencies for March, while Trepp reported a 52-bp drop.
The lowest delinquency rate among the major property types is that of industrial: 0.45% for Fitch-rated loans and 0.37% as measured by Trepp. Even lower, according to Fitch, is self-storage at 0.06%, slightly higher than in February. Delinquencies overall in March stood at 3.09% as measured by Trepp and 1.76% for Fitch-rated loans.
“Fitch anticipates the overall delinquency rate will exhibit volatility this year with loans continuing to oscillate in and out of the index as they get cured or fall behind on payments,” the rating agency said.
Pictured: Republic Plaza in Denver.