Dive Brief:

• Delinquency rates for apartment commercial mortgage-backed securities declined 27 basis points from 6.86% to 6.59% in September, according to a report from data firm Trepp.
• However, multifamily delinquencies were still nearly double their rate of 3.33% in September 2024. Three months ago, they were 5.91%, and six months ago, they sat at 5.44%.
• Servicing rates for apartment CMBS loans fell 41 bps month over month to 8.2% in September, according to a separate report from Trepp. The multifamily rate was 6.07% a year ago and 8.31% six months ago.

Dive Insight:

After six months of increases, the Trepp CMBS delinquency rate for commercial real estate dropped six bps to 7.23% in September. The only sector to see delinquency rates rise in September was retail, which increased 34 basis points to 6.76% after back-to-back months of declines. 

Trepp’s 30-day CRE delinquent loan balance is 0.48% in September, up seven bps from August. 

Lodging saw delinquency rates fall 73 basis points, from 6.54% to 5.81%, its lowest rate since March 2024, when it was 5.45%. Office rates dropped 53 bps to 11.13%, still an all-time high prior to last month, according to Trepp.

The Trepp CMBS Special Servicing rate rose 36 basis points in September to hit 10.65% — its highest level since May 2013, when the overall rate was 10.67%.

In its monthly report, CrediQ confirmed the delinquency trends noted by Trepp, with overall CRE rates falling from 9.44% in August to 8.59% in September. Specially serviced loans also declined, falling from 10.95% to 10.63%. 

CrediQ’s combined delinquent and/or specially serviced loan rate was 11.28% in September, which was a modest decrease from 11.78% the prior month. The metric has been between 10% and 12% in 2025, after sitting at sub-5% levels in 2022 and 2023.

Office properties are driving much of the distress, followed by multifamily, according to CrediQ. Industrial properties have the lowest delinquency rate.

As more distressed properties become available, apartment firms are getting ready to buy. For instance, in September, Dallas-based The Milestone Group closed a $1.1 billion fund. Milestone Real Estate Investors VI, LP will target well-located, undercapitalized and undermanaged properties that offer embedded growth opportunities.

"We collaborate closely with sellers to address their unique circumstances, leveraging creative structures such as recapitalizations, debt assumptions, entity purchases, portfolio acquisitions, and rescue capital to facilitate refinancings and optimize capital structures,” Jeffrey Goldberg, co-managing partner of Milestone, said in the press release.

Others see similar opportunities. 

“There’s a lot of money on the sidelines, but there’s still a mountain of distress out there that has to be navigated and worked through,” Jim Brooks, president of Los Angeles-based real estate investor BH Properties, told Multifamily Dive. “Those are good opportunities for firms like us.”

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