Office Sector CMBS Delinquencies Spiked In December
January 18, 2022 | Lynn Pollack | GlobeSt.com
A significant December spike in office sector CMBS delinquencies shows the sector is still reeling from the ongoing impacts of the COVID-19 pandemic, according to new analysis from Trepp.
Trepp’s overall CMBS delinquency rate increased last month for the first time in 18 months, with the office CMBS delinquency rate rising 72 basis points over the previous month to 2.53%. That’s the largest single month-over-month increase in office delinquencies since 2017, when the rate increased by over 50 points twice, Trepp’s Jack Forge says.
The firm is currently tracking nearly $131 billion in interest-only office loans, citing parallels to mall property interest-only loans in the retail sector. In a recent report, Trepp examined the parallels between maturing loans in each sector and questioned whether office could see the same fate as retail.
“Given the latest office delinquency reading, it seems we may have been right to question whether the office is in a better position than retail,” LaForge says, noting that the firm is especially concerned by properties with a high loan-to-value ratio that are set to mature in the next five years and are posting declines in total revenue per square foot.
