But "fundamentals are good," real estate expert states
The delinquency rate of commercial mortgage-backed securities in August rose for the first time in over two years.
The latest CRED iQ reports revealed that the CMBS delinquency rate jumped from 2.93% in July to 3.21% in August. The delinquency rate was equal to the portion of all delinquent, specially serviced loans and delinquent non-specially serviced loans.
Multifamily delinquency rate posted a modest month-over-month increase, up to 1.90% in August. The rise was attributed to a maturity default of a $481 million mortgage, secured by 43 multifamily properties across the Midwest and Southwest.
Among the other property types, retail has the highest delinquency rate – climbing for the fourth month in a row to 5.91%. It has surpassed the lodging sector, which registered a 5.63% delinquency rate. The office delinquency rate also increased to 1.52%, while industrial and self-storage properties were relatively unchanged at 0.29% and 0.02%, respectively.
On top of that, CRED iQ’s special servicing rate (includes delinquent and non-delinquent loans) increased 44 basis points to 4.91% - pushing the overall distressed rate (delinquencies + special servicing rates) up to 5.10% of CMBS loans that are specially serviced, delinquent, or a combination of both.
Despite higher delinquency rates, some experts believe the commercial real estate market continues to perform well.
“Lenders are cautious, appropriately so, and the equity is appropriately cautious. So that means everything has slowed down, and I’ve seen deals put on hold or cratered altogether because of this,” real estate advisor Joseph Rubin told Mortgage Professional America in an exclusive interview.
Read more: Real estate crisis? What real estate crisis?
“The fundamentals are good. There’s lots of demand for all sectors of real estate with the exception perhaps of office, which is a complicated thing unto itself. But if you look at multifamily, if you look at industrial, -- even retail --- it’s doing well. Hotels are doing well. The properties are really performing well, generating cash flow. And so, the issues we’re facing today aren’t real estate issues; they’re exogenous economic issues.”
