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Slight Hiccup in 30+ Days CMBS Delinquency Rate Recorded in June

A non-performing loan backed by a hotel portfolio contributed to a higher delinquency rate.

The steady decline in the all-property 30+ days CMBS delinquency rate hit a bump in June, as one hotel portfolio loan skewed the figure higher, according to research firm Trepp. As a result, the June all-property delinquency rate rose to 2.84 percent, an 18-basis-point increase from the month prior. Year-over-year, the June delinquency rate was down by 111 basis points, Trepp reports.

Meanwhile, ratings firm Fitch estimates that June delinquencies fell by one basis point, to 1.87 percent.

The main culprit for the increase in the rate in June was the $754 million loan backed by the Innkeepers loan portfolio, which was reported as non-performing and past its maturity date, according to Trepp. But the loan comes with several one-year extension options and is expected to be updated to current status next month.

Still, the delinquency rate for the lodging sector went up by 99 basis points during the month, to 2.41 percent. Delinquency also went up for loans backed by retail properties—by 15 basis points, to 4.44 percent,—and for office-backed loans, by 4 basis points to 3.02 percent.

Loans backed by multifamily and industrial properties recorded slight improvements in delinquency, by 5 basis points to 2.11 percent and 11 basis points to 1.94 percent respectively.

The property-by-property breakdown differs a bit from June results reported by Fitch. The ratings firm estimates that the delinquency rate went down in the retail, office, multifamily and hotel sectors, but went up slightly for loans backed by industrial properties. Fitch reported that the delinquency rate went down by 4 basis points in the retail sector, to 4.4 percent; 4 basis points in the office sector, to 2.48 percent; 7 basis points for hotel properties, to 1.41 percent; and 2 basis points for multifamily properties, to 0.51 percent. The delinquency rate in the industrial sector went up by 5 basis points, to 0.96 percent.

Fitch researchers note that while they expect to see a certain degree of volatility in the coming months, their projection of a year-end 2019 CMBS delinquency range of 1.75 percent to 2.00 percent remains in place.

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