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Office CMBS Delinquency Rate Spikes to 10.4%, Just Below Worst of GFC Meltdown

-to-residential conversions are growing, but are minuscule because not many towers are suitable for conversion. By Wolf Richter for WOLF STREET.

Loans are pulled off the delinquency list when the interest gets paid, or when the loan is resolved through a foreclosure sale, generally involving big losses for the CMBS holders, or if a deal gets worked out between landlord and the special servicer that represents the CMBS holders, such as the mortgage being restructured or modified and extended. Of the major sectors in CRE, office is in the worst shape with a delinquency rate of 10.4%, far ahead of lodging (6.9%), permanently troubled retail (6.6%), and multifamily (4.2%). For years, there was this assumption that you cannot lose money in real estate, especially office CRE in prime US markets, and investors around the globe piled into it.

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