CMBS 2.0 Hotel, Retail Loans Spur Rise in Delinquencies

CMBS (Commercial Mortgage Backed Securities) which refers to pools of mixed-loan types and multiple borrowers, commercial and multifamily mortgages rather than residential real estate.

Driven by cash flow disruptions among retail and hotel properties, CMBS delinquencies more than doubled in June to 5.8 percent and could potentially more than double again within two months, according to Moody’s Investors Service.

The rating agency said in a report this week that June produced the largest one-month increase in the delinquency rate of conduit CMBS. Moody’s said that the total conduit CMBS delinquency rate would rise to 10.1 percent in July and 14.3 percent in August if all properties with missed payments in June remain delinquent over the next two months.

As of June, 13.3 percent of hotel loans in CMBS conduit pools were delinquent, as was 24.4 percent of all hotel CMBS, according to Trepp.

The numbers are only slightly better for retail, for which the June delinquency rate is 8.3 percent for conduit CMBS and 18.1 percent of all CMBS. Total CMBS delinquency as of June was 3.4 percent for multifamily properties, 2.7 percent for office and 1.5 percent for industrial, Trepp said