Trepp, a leading data provider and analytics firm serving the commercial real estate industry, issued a report on the state of the commercial real estate mortgage security (CMBS) markets this week. The firm reported that The Trepp CMBS Delinquency Rate in May logged its largest increase since we started tracking this metric in 2009. The May reading is 7.15%, an increase of 481 basis points over the April number. The CMBS Special Servicing Rate also witnessed a considerable increase of 168 basis points, coming in at 6.07% in May.

Trepp Talks May Delinquency

In terms of the proportion of loans that missed payments in May but remained less than 30 days delinquent, the number came in at 7.6% by balance. Trepp said that they expect to see this number increase again in June.

The delinquencies are not spread among the sectors of the commercial real estate markets. The report found that the lodging CMBS sector was hurt the worst by the pandemic. This sector saw the largest increase in both the delinquency and special servicing rates among all property types last month. The lodging delinquency rate came in at 19.13% while the special servicing rate was recorded at 16.21%.

The retail sector was also hit hard in May. After slowing inching up every month, the retail delinquency rate rose by an enormous 647 basis points last month to 10.14%.

Other sectors of the commercial real estate markets showed very little change to pre-pandemic delinquency rates. The delinquency rate on loans to multifamily properties rose 133 bps, to 3.25%, while the delinquency rate on loans secured by office or industrial properties rose less than 50 bps.

Trepp also noted that in a positive sign for the CMBS markets the new issuance CMBS market is making a comeback. Five deals priced last month, more than the four new deals priced in February but lower than the nine new deals priced in January.