DBRS Morningstar CMBS Monthly Highlights—August Remittance: Delinquency Rate Continues its Decline; Retail Contributes to Special Servicing Uptick
DBRS Morningstar presents the Monthly Highlights report, which covers the commercial mortgage-backed securities (CMBS) market activity and performance of conduit and single-asset/single-borrower loans (excluding agency loans). In August:-- The delinquency rate for loans packaged in commercial mortgage-backed securities (CMBS) continued its decline for the second consecutive month, improving 17 basis points (bps) to 2.88%. Among the major property sectors, the hotel sector posted the greatest delinquency rate decline, tumbling 39 bps to 5.00%.
-- Similarly, compared with year-ago levels, the hotel sector saw the largest percentage decline in delinquency rate, falling 6.61 percentage points, followed by retail with a decline of 3.63 percentage points.
-- The special servicing rate increased this month, bringing to an end 22 consecutive months of drops, increasing 30 bps to 5.08%, due to a rise of retail loans transferring to special servicing.
-- Two large distressed property sales increased the liquidation activity just beyond the $300 million mark but below the $400 million level seen in May (the highest recorded for this year); the weighted-average loss severity continued to be above 60% for the second time in 10 months. The maturity payoff rate rose to 68.1% from 64.3% from July.
-- DBRS Morningstar doesn't expect much movement through year-end in the year-to-date maturity payoff rate, which stands at 66.2%, as a slug of mall-backed loans will likely have trouble obtaining take-out financing.
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