DBRS Morningstar CMBS Monthly Highlights—July Remittance: CMBS Delinquency and Special Servicing Rates March Higher as Hotel and Office Post Sizable Increases; Maturity Payoff Rate Sinks
-- The delinquency rate for loans packaged in U.S. commercial mortgage-backed securities (CMBS) rose to its highest level since February 2022, surging 31 basis points (bps) from June to 3.85%, with hotel- and office-backed loans rising 87 bps and 48 bps, respectively.-- Since hitting a bottom of 2.81% in December 2022, the CMBS delinquency rate hasn't been this high since February 2022.
-- The special servicing rate rose for the fifth straight month, up 24 bps to 7.06%, its highest level since October 2021.
-- The office special servicing rate has risen for eight straight months, increasing 25 bps to 8.14% in July 2023, and has more than doubled from 3.27% in July 2022.
-- Distressed property sales are still relatively rare, not topping $470 million since the summer of 2021, and registered just $214.4 million in July 2023. Many special servicers are opting to hold on to the debt for longer and work out situations with borrowers.
-- Pressure on maturing loans, especially office and mall loans, continues. The maturity payoff rate fell for the fifth straight month, sinking to just 28.6% from 45.4% in June 2023, its lowest level since October 2020.
-- The year-to-date maturity payoff rate stands at 50.1%. DBRS Morningstar's 2023 outlook for the maturity payoff rate stands at roughly 50% to 55% as investors and lenders continue to shy away from maturing office, mall, and mixed-use loans. Multifamily continues to perform well, posting a better than 95% maturity payoff rate in July.
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