DBRS Morningstar CMBS Monthly Highlights—May Remittance: Delinquency and Special Servicing Rates Improve; Troubled Malls Drive Maturity Payoff Rate Sharply Lower

DBRS Morningstar presents the Monthly Highlights report, which covers CMBS market activity and performance for conduit and SASB loans (excluding agency loans). In May:

-- The volume of delinquent loans continues to fall, declining by more than $1.5 billion and pushing the May delinquency rate down 30 basis points (bps) to 3.10%, the lowest level since April 2020.
-- Compared with year-ago levels, the hotel sector saw the largest percentage decline in delinquency rate, falling 8.46 percentage points, followed by retail with a decline of 3.71 percentage points.
-- Despite newly transferred loans exceeding resolutions, the special servicing rate fell for the 20th straight month, down 16 bps to 5.20%, spurred by a jump in liquidated loans.
-- The hotel sector also saw the steepest special servicing rate decline over the past 12 months, falling 12.17 percentage points to 8.81%.
-- Liquidation activity broke the $400 million level for the first time in eight months, spiking to $468.5 million, more than double April's balance, while the 12-month weighted-average loss severity remained at roughly 50%.
-- The year-to-date maturity payoff rate plummeted to 33.6% in May, dragging the year-to-date rate down to 63.5% from more than 75% in April. Despite rising interest rates, we expect the full-year rate to improve to 65% to 70% by YE2022.