Hotels Hit Hard as CMBS Delinquencies Reach Historic High

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The delinquency rate for commercial real estate loans in commercial mortgage-backed securities (CMBS) jumped in May, rising 40 basis points to 8.42%, the highest rate in the history of the CMBS industry, according to research analytics firm Trepp.

The figure includes loans 30 or more days delinquent or in foreclosure, as well as real estate owned by lenders. The percentage of seriously delinquent loans, at least 60 days delinquent, jumped 41 basis points to 7.55%. The serious delinquencies include non-performing balloon loans, as well as foreclosures.

The national delinquency rate has climbed steadily for months. In March, it was 7.61%, and in April, 8.02%.

Among all property types, hotels had the highest CMBS delinquency rate in May, 18.45%, up from 17.16% in April. The multifamily delinquency rate increased 28 basis points, from 13.06% in April to 13.34% in May.

Office delinquencies rose from 5.37% a month earlier to 5.81% in May, and retail delinquencies climbed from 6.44% in April to 6.86% in May.

Industrial rate improves

The only major property type to show a decrease in delinquencies was industrial. The rate dropped from 5.44% in April to 5.34% in May.

Today’s CMBS delinquency rates stand in stark contrast to those of last year. One year ago, the national delinquency rate was 2.77%, according to Trepp. Six months ago, the rate was 5.65%.

With regard to seriously delinquent loans, a year ago, the rate was 2.18%, and six months ago, 4.29%.

Meanwhile, CMBS spreads soared 70 basis points in May for recent vintage super senior bonds, following an earlier rally that saw some super senior levels drop about 160 basis points for the year through April. May was the first losing month of 2010 for CMBS, Trepp reports.


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