CMBS delinquency falls to 7.87% on one loan cure

The Trepp CMBS delinquency rate fell 15 basis points to 7.87% in October, from 8.02% in September, Trepp reported Nov. 2. The improvement came largely from one loan: a $975 million mortgage backed by a portfolio of showroom properties in High Point, N.C., and Las Vegas returned to current status.

Excluding the showroom loan, retail posted the largest increase, up 63 basis points to 7.21%. Office rose 17 basis points to 12.33% and multifamily five basis points to 8.09%. Lodging fell 24 basis points to 5.94% and industrial four basis points to 1.10%.

For allocators, 12.33% is the office number to carry into bridge and mezz underwriting, not the 7.87% headline. The aggregate move this month was a single asset's cure rather than a broad improvement in credit. Office led the month's new delinquencies, and the five largest newly delinquent loans were office-heavy: towers in Chicago, Los Angeles and Washington, D.C., an office portfolio spanning Washington, D.C. and Northern Virginia, and a New Orleans hotel.

The two largest new delinquencies were a $384.3 million office loan in Los Angeles and a $210.0 million apartment loan in the San Francisco Bay Area. Both are large enough to move a loan into special servicing and force a lender to choose between extending and selling. The multifamily entry will test the apartment maturity wall.

November's reading will show whether the retail and office increases were one-month moves or the start of a wider deterioration.