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CMBS delinquencies fall for first time in nearly 3 years

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The delinquency rate on loans backing commercial mortgage-backed securities dropped 88 basis points to 7.78% in October, the first drop in 33 months, according to Fitch Ratings. Seven loans worth more than $100 million were resolved in October, including the $4.1 billion Extended Stay America loan, which pushed down delinquency numbers. Analysts at Trepp and Deutsche Bank also pointed out the major hotel resolution, but both differed on its effect on delinquency rates. Hotel delinquencies overall fell to 14.14% in October, a more than 700 bps decline from the previous month and the largest drop ever for any CMBS asset type measured by Fitch. Multifamily loans now have the highest delinquency rate at 14.57%, followed by hotels and retail loans at 6.25%. Industrial and office loans hold the lowest rates at 5.83% and 5.38% respectively. Trepp added in its report that the workout of the giant Stuyvesant Town loan could drive delinquency rates down even further. With loans for conduit CMBS growing 940% in the third quarter from a year ago and delinquency numbers on the decline, the Mortgage Bankers Association said deals that didn't make sense six or nine months ago now do. Write to Jon Prior.

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