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CMBS Delinquency Rate Dips in October

Trepp, Fitch Ratings measured declines in CMBS delinquency rates in the past month.

The 30+ days CMBS delinquency rate continued its downward trend in October 2019. The all-property delinquency rate fell to 2.47 percent during the month, according to Trepp, a decline of 4 basis points from the month before and 95 basis points from the year-ago period. Fitch Ratings estimates that the all-property CMBS delinquency rate fell 3 basis points in October, to 1.66 percent.

Trepp researchers recorded delinquency declines on loans backed by office and multifamily properties. The delinquency rate in the multifamily sector fell by 36 basis points in October, to 2.07 percent. In the office sector, delinquency went down 11 basis points, to 2.50 percent.

However, the 30+ day delinquency rate shot up 46 basis points in the industrial sector, to 2.46 percent. There were smaller jumps in delinquencies on loans backed by retail and lodging properties. In the retail sector, the delinquency rate increased five basis points, to 4.20 percent. In the lodging sector, it went up by two basis points, to 1.49 percent.

Fitch Ratings also noted a big jump in industrial delinquencies in October, by 22 basis points to 0.86 percent. Fitch researchers attribute this increase primarily to a $49.2 million loan on a Shopko industrial portfolio, the loan on which became 60-day delinquent during the month. Shopko planned to occupy the three properties included in the portfolio through 2035, but vacated them after filing for bankruptcy protection earlier this year. One of the three properties secured a new tenant, but that tenant has now missed several rent payments.

In addition, the hotel sector experienced a slight uptick in delinquency, according to Fitch data, by 6 basis points, to 1.44 percent.

On the other hand, retail, office, mixed-use and multifamily properties all posted delinquency declines. The delinquency rate on loans backed by office properties went down 11 basis points, to 2.12 percent, according to Fitch. Multifamily delinquency declined seven basis points, to 0.46 percent. The retail sector experienced a decline of two basis points, to 4.03 percent, and mixed-use properties saw a one-basis-point decline to 0.86 percent.

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