DBRS Morningstar CMBS Monthly Highlights—September Remittance: Delinquency Rate Ticks Up While Special Servicing Rate Rises for Second Straight Month

DBRS Morningstar presents the Monthly Highlights report, which covers the commercial mortgage-backed securities (CMBS) market activity and performance of conduit and single-asset/single-borrower loans (excluding agency loans). In September:

-- The delinquency rate for loans packaged in CMBS rose for just the third time since July 2020, climbing 4 basis points (bps) to 2.92%.
-- Retail and office drove the delinquency rate higher, rising 19 bps and 10 bps, respectively.
-- The hotel sector continues to improve, posting a 14-bp delinquency rate decline from August to 4.86%, and a 6.85-percentage-point decline from a year ago.
-- After falling for 22 consecutive months, the special servicing rate increased for the second consecutive month, rising 9 bps to 5.17% on the back of office, which saw a 35-bp rise, followed by an 11-bp increase for retail loans.
-- Distressed property sales remained muted as September liquidation activity fell to nearly $200 million from just above $300 million in August and below the 12-month moving average of just $284 million, while the weighted-average loss severity dipped below 40% for the third time this year.
-- The maturity payoff rate declined to 41.9% from 68.1% in August. However, DBRS Morningstar doesn't expect much movement through year-end in the year-to-date maturity payoff rate, which stands at 62.2%, as a slug of mall-backed loans will likely have trouble obtaining takeout financing.