The delinquency rate on loans included in commercial mortgage-backed securities (CMBS) conduit/fusion transactions dropped four basis points (bps) in May to 9.18%, according to Moody's Investors Service. The total dollar balance of delinquent loans in May remained steady at approximately $56 billion.
Moody's found that $3.4 billion in loans became newly delinquent last month, while previously delinquent loans totaling approximately $4.1 billion became current, worked out or disposed of. In all, the total number of delinquent loans decreased to 4,017 in May from 4,047 in April.
By property type, the industrial delinquency rate increased the most in May, rising 93 bps to 11.16%. The industrial property delinquency rate increased 587 bps over last year, representing the biggest increase among the five major property types.
Multifamily showed the second-greatest increase in May, rising 41 bps to 15.76%. The retail sector showed the greatest decline, falling 31 bps to 7.31%. The office sector delinquency rate moved the least during May, declining 2 bps to 6.87%. The delinquency rate for hotels also declined slightly, slipping 2 bps to 16.35%.
Moody's also determined that the top 25 metropolitan statistical areas continued to outperform the broader market, with a delinquency rate of 8.48% – 70 bps below the national average. Two of the four geographical regions – the East and the Midwest – had small increases in their delinquency rates, while the other two regions – the South and West – posted moderate declines.
‘We expect a high single-digit or low double-digit delinquency rate to persist over the near term,’ says Tad Philipp, director of commercial real estate research at Moody's.
