- The CMBS delinquency rate rose 17 basis points to 8.02% in September, the highest reading since November 2020, as five large loans turned delinquent or advanced toward foreclosure.
- Multifamily rose 35 basis points to 8.04% and office rose 16 to 12.16%, while retail fell 62 basis points to 6.58% after three large malls cured or paid off.
- The seriously delinquent rate rose 18 basis points to 7.87%, and several large loans remain in extension talks, so more maturity-driven distress could follow.
The CMBS delinquency rate rose 17 basis points to 8.02% in September, its highest level since November 2020, according to Trepp.
Five large single-asset, single-borrower loans drove much of the increase, and four of them had missed their maturity payoffs months earlier while still performing.
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Five Big Loans Turn Delinquent
The five largest newly delinquent loans spanned mixed-use, office and lodging collateral. They included a $1.10 billion loan on an eight-property studio-and-office portfolio in Los Angeles and a $470.0 million loan on a two-tower office complex in Houston.
The list also featured a $280.0 million beachfront hotel loan in Santa Monica, a $230.1 million office loan in Denver and a $208.9 million single-tenant office loan in Silicon Valley.
Non-performing matured balloon loans made up 68% of newly delinquent balances, foreclosures 19% and 30-day delinquencies 13%.
Negotiations and Foreclosures
The Los Angeles portfolio and the Houston complex each missed their maturity payoffs months earlier, and extensions are still under negotiation. Trepp says their September moves likely reflect those talks rather than a new default.
The Santa Monica hotel borrower received a notice of default in July and is still pursuing a sale or refinancing. In Denver, a court-appointed receiver took control after the borrower indicated it would give up the asset.
The Silicon Valley loan exhausted its extension options, missed its August maturity and moved directly from current to foreclosure.
Office Stays Highest as Retail Cures
Delinquency rates rose or held flat in four of the five major property types. Multifamily climbed 35 basis points to 8.04%, lodging rose 34 basis points to 6.18% and office rose 16 basis points to 12.16%. Industrial held at 1.14%.
Retail fell 62 basis points to 6.58% after three large regional malls cured or paid off. They included a $260.1 million mall in Lakewood, California, a $210.0 million mall near Rochester, New York, and a $232.9 million mall in Providence, Rhode Island, which paid off in full.
The month’s largest cure was a $384.3 million Los Angeles office tower that returned to performing matured balloon status after the borrower resumed interest-only payments.
Why It Matters
Office remains the weakest sector at 12.16%, and the monthly gain adds to the pressure already visible in office CMBS special servicing. Multifamily now sits at roughly the same level as the overall rate, at 8.04% versus 6.59% a year earlier.
The headline rate was 7.23% a year ago and 7.55% six months ago. Including loans past maturity but current on interest, the rate would be 9.66%, down 15 basis points from August.
The seriously delinquent rate, covering 60+ days, foreclosure, REO and non-performing matured balloons, rose 18 basis points to 7.87%.
What’s Next
The CMBS 2.0+ rate, which covers post-crisis deals, rose 17 basis points to 7.93%, with office at 12.09% and multifamily at 8.06%. Watch how many of the loans in extension talks roll into foreclosure, especially as office loan maturities build through 2028.
Foreclosures stand at 2.90% of the CMBS universe and REO at 1.46%, so resolution of those assets will shape the next few readings.
