CMBS rate dips, but the underlying stack worsens

Trepp's August CMBS delinquency report delivered a one-basis-point dip in the overall rate, to 7.85%, entirely on the back of cures: several large loans fell delinquent after failing to pay off at maturity, and the decline survived only because a large Times Square loan returned to performing status.

Beneath that cures-driven headline, the property-type stack moved the other way: lodging jumped 49 basis points to 5.84%, the month's largest increase, while retail added 24 points to 7.20%, office rose nine to 12.00%, industrial crept up one to 1.14%, and multifamily held flat at 7.69%.

Office remains the dominant name in the newly delinquent list, where Trepp's five largest newly delinquent loans in August include an office portfolio spanning Washington, D.C., and Northern Virginia, office towers in Chicago, Los Angeles, and the District, and a New Orleans hotel.

The refinancing wall, as this publication has argued, is being financed rather than foreclosed. August's cures bought time while property-type rates drifted higher, and the office-heavy new-delinquency list suggests the next hard-maturity cohort will determine whether this remains a liquidity problem being rescheduled or becomes a rates problem coming due.