(Editor's Note: This report is S&P Global Ratings' monthly summary update of U.S. CMBS delinquency trends.)
Key Takeaways
- The U.S. CMBS overall delinquency rate increased by 32 basis points (bps) month over month to 4.7% in April.
- Seriously (60-plus-days) and 120-plus-days delinquent loans accounted for 85.5% and 17.8%, respectively, of all delinquent loans.
- By balance, delinquency rates increased for office, lodging, and retail loans, and they decreased for multifamily and industrial loans.
- The delinquency rate for office loans increased by 73 bps to 7.1%, which is the highest of all property types.
The Overall Delinquency Rate Increased By 32 Basis Points
In this report, S&P Global Ratings provides its observations and analyses of the U.S. private-label CMBS universe, which totaled $711.5 billion as of April 2024. The overall U.S. CMBS delinquency (DQ) rate increased by 32 basis points (bps) month over month to 4.7% in April 2024. The rate increased 190 bps from a year earlier, representing a 65.0% year-over-year increase by DQ balance (see chart 1). By dollar amount, total delinquencies increased to $33.3 billion, representing a net month-over-month increase of $2.05 billion and a net year-over-year increase of $13.2 billion (see chart 2).
Chart 1
Chart 2
Several Large Loans Moved Into Delinquency
The overall DQ rate increased in April with an additional 119 loans ($4.0 billion) becoming delinquent. Table 1 shows the top five of these loans by balance. Two of the five newly delinquent loans have an office component at the underlying properties.
The largest delinquent loan was 1440 Broadway. The loan is secured by a 740,387-sq.-ft. mixed-use office and retail property located in New York. The loan's debt service coverage ratio (DSCR) was 0.66x and occupancy was 85.0% as of the trailing six-month period ended in June 2023.
Green Loan Service, a new special servicer, was appointed on Dec. 6, 2023, and is currently evaluating servicing standards and the pooling and servicing agreement. The loan is current and in non-performing material balloon status; however, the maturity date of March 6, 2024, caused an appraisal trigger event and the special servicer must order an appraisal.
Table 1
| Top five newly delinquent loans in April 2024 | ||||
|---|---|---|---|---|
| Property | City | State | Property type | Delinquency balance ($) |
| 1440 Broadway | New York | New York | Office | 399,000,000 |
| 25 Broadway | New York | New York | Office | 250,000,000 |
| Maine Mall | South Portland | Maine | Retail | 235,000,000 |
| Crossland Portfolio III | Various | Various | Lodging | 195,500,000 |
| Valencia Town Center | Valencia | California | Retail | 186,942,739 |
Seriously Delinquent Loan Levels Remain High
Loans that are 60-plus-days delinquent represented 85.5% ($28.5 billion) of the delinquent loans in April (see chart 3). Meanwhile, 120-plus-days delinquent loans (i.e., those reported in the CRE Finance Council investor reporting package with a loan code status of "6") represented 17.8% ($5.9 billion) of the delinquent loans (see chart 4). The 120-plus-days delinquent loans have been on an overall downward trend since peaking at 44.6% ($14.9 billion) of delinquent loans in May 2021.
Chart 3
Chart 4
The Special Servicing Rate Increased By 77 Bps
The overall special servicing rate increased by 77 bps month over month to 7.2% in April (see chart 5). By sector, the special servicing rate rose for multifamily (153 bps to 4.1%), retail (116 bps to 10.2%), office (56 bps to 10.7%), and lodging (8 bps to 6.8%), and remained relatively flat for industrial (0 bps to 0.3%) loans. However, the overall special servicing rate remains well below the 9.5% peak reached in September 2020, despite increasing in recent months.
The largest loan to move into special servicing as of April is Parkmerced. The mortgage loan is secured by an eight-story, 3,221-unit multifamily property in San Francisco that is used as student housing. The DSCR was 0.47x and occupancy was 80.0% as of the trailing nine-month period ending in September 2023.
The loan is currently less than one month delinquent and was transferred to the special servicer on March 14, 2024.
Chart 5
DQ Rates Increased For All Property Types Except Multifamily And Industrial
In April, office loans had the highest DQ rate by property type. The overall DQ rate increased by balance for office (73 bps to 7.1%; 272 loans; $12.7 billion), retail (28 bps to 5.4%; 242 loans; $6.5 billion), and lodging (28 bps to 5.3%; 137 loans; $5.3 billion), and decreased for multifamily (10 bps to 3.1%; 158 loans; $3.8 billion), industrial (2 bps to 0.4%; 14 loans; $211.0 million). Chart 6 shows the historical DQ rate trend by property type.
There were 119 newly delinquent loans totaling $4.0 billion in April. The sector leads were multifamily (34 loans; $815.4 million), office (29 loans; $1.6 billion), retail (25 loans; $783.7 million), lodging (15 loans; $400.5 million), and industrial (one loan; $10.3 million).
By property type, DQ composition rates increased year over year for office (to 38.3% from 25.3%) and multifamily (to 11.5% from 8.5%) loans, and decreased for retail (to 19.4% from 36.6%), lodging (to 15.9% from 19.2%), and industrial (to 0.6% from 0.9%) loans. Charts 7 and 8 show the year-over-year change in the property type composition for delinquent loans.
Chart 6
Chart 7
Chart 8
Several Large Loans Moved Out Of Delinquency
Despite the overall DQ rate increasing in April, 103 loans totaling $2.8 billion moved out of delinquency. Table 2 shows the top five of these loans by balance.
The largest loan to move out of delinquency was PFHP Portfolio. The loan is secured by 20 extended-stay, limited-service, or full-service hotels totaling 2,461 keys, which are diversified across six states: Florida, Texas, Indiana, Illinois, Colorado, and Michigan. As of the trailing nine-month period ended September 2023, the loan's DSCR was 1.58x and occupancy was 73.0%.
The loan was transferred to the special servicer on July 22, 2022, and is currently real estate owned because the borrower refused the modification proposals. The trust took the title of the 20 properties on Sept. 13, 2023, with the excess cash flow being used for advances.
Table 2
| Top five loans that moved out of delinquency in April 2024 | ||||
|---|---|---|---|---|
| Property | City | State | Property type | Outstanding balance ($) |
| PFHP Portfolio | Various | Various | Lodging | 204,000,000 |
| Carolina Place | Pineville | North Carolina | Retail | 147,426,931 |
| Highland Park | Washington | Washington, D.C. | Multifamily | 146,000,000 |
| Oglethorpe Mall | Savannah | Georgia | Retail | 133,551,519 |
| Crossings at Canton | Canton | Michigan | Multifamily | 114,805,000 |
This report does not constitute a rating action.
| Primary Credit Analyst: | Senay Dawit, New York + 1 (212) 438 0132; senay.dawit@spglobal.com |
| Secondary Contacts: | Amanda Blatz, New York; amanda.blatz@spglobal.com |
| Tamara A Hoffman, New York + 1 (212) 438 3365; tamara.hoffman@spglobal.com | |
| Research Contact: | James M Manzi, CFA, Washington D.C. + 1 (202) 383 2028; james.manzi@spglobal.com |
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