FREE

DBRS Morningstar CMBS Monthly Highlights—April Remittance: Delinquency and Special Servicing Rates Improve; Maturing Mall Loans Likely to Weigh on the 2022 Refinance Rate

DBRS Morningstar presents the Monthly Highlights report, which covers CMBS market activity and performance for conduit and SASB loans (excluding agency loans). In April:

-- The volume of delinquent loans continues to fall, declining by more than $750 million and pushing the April delinquency rate down 14 basis points (bps) to 3.40%, the lowest level since April 2020.
-- Compared with year-ago levels, the hotel sector saw the largest percentage decline in delinquency rate, falling 9.75 percentage points, followed by retail with a decline of 3.42 percentage points.
-- The special servicing rate fell for the 19th straight month, down 27 bps to 5.36%, as the volume of loans returned to master servicing continues to outpace new transfers by a healthy margin.
-- Over the previous 12 months, the hotel sector saw the steepest special servicing rate decline, falling 13.84 percentage points to 9.26%.
-- Liquidation activity remains subdued by historical standards as the volume of liquidated loans posted its eighth consecutive month below $400 million while the weighted-average loss severity sits below its historical average.
-- The year-to-date maturity payoff rate stands at 78.1% through April, but we expect it to decline slightly to roughly 75% by year-end based on nearly $1.5 billion of underperforming regional mall loans that come due this year.
-- Despite the ongoing uncertainty in the office sector, which accounts for nearly 24% of maturing loans, as the omicron variant continues to threaten plans for a full return to offices, accelerated virtual working trends may affect office demand less than commonly thought. Although employees may spend less time in the office, the need to accommodate peak office attendance limits the amount of potential reductions in space.