DBRS Morningstar CMBS Monthly Highlights—October Remittance: CMBS Delinquency and Special Servicing Rates Rise, Maturity Payoff Rate Posts Third Straight Increase

-- The delinquency rate for loans packaged in U.S. commercial mortgage-backed securities (CMBS) inched up by 6 basis points (bps), increasing to 4.03% in October and rising 121 bps since the beginning of the year.
-- The office delinquency rate rose for the tenth straight month while the retail, industrial, and hotel delinquency rates fell.
-- The special servicing rate jumped for the ninth month in a row, rising 13 bps to 7.25%, its highest level since October 2021.
-- The office special servicing rate has risen for ten straight months, increasing 39 bps to 9.49% in October 2023, and has more than doubled from 3.95% in October 2022.
-- Liquidation volume fell to $232.1 million in October from $388.6 million in September, resulting in $155.5 million in losses and a 67% loss severity. Many special servicers continue to hold on to the debt for longer and work out situations with borrowers as many lenders and investors continue to shy away from the sector amid market volatility.
-- The maturity payoff rate rose to its highest level in the past eight months, increasing 2.6 percentage points to 63.2% in October from 60.6% in September 2023. All the of maturing hotel loans successfully paid off, but office continued to lag, posting just a 29% successful payoff rate, while the multifamily payoff rate increased to more than 95%, up from about 70% in September.
-- The year-to-date (YTD) maturity payoff rate stands at 50.8%. DBRS Morningstar's 2023 outlook for the maturity payoff rate stands at roughly 50% to 55% as investors and lenders continue to shy away from maturing office, mall, and mixed-use loans.