Dive Brief:
- Delinquency rates for apartment commercial mortgage-backed securities declined for a second straight month, dropping 34 basis points to 6.64% in December, according to a report from data firm Trepp.
- In October, delinquency rates for apartment commercial mortgage-backed securities rose 53 basis points to 7.12%, before falling to 6.98% in November. A year ago, they were 4.58%, according to Trepp.
- The overall Trepp CMBS delinquency rate for commercial real estate increased four basis points to 7.3%, after falling 20 basis points to 7.26% in November. A year ago, it stood at 6.57%.
Dive Insight:
Out of the five major CRE property types, two saw decreases in December. Office fell 37 basis points to 11.31%, marking its second consecutive month of decline. Still, it increased versus the last three Decembers by rates of 30, 549 and 973 basis points, respectively.
Industrial delinquencies ticked up 13 bps to 0.8%, while retail rose 18 bps to 6.92%. Lodging again posted the biggest increase, jumping 44 bps to 6.61%.
Despite rising distress numbers, some observers don’t expect a flood of troubled apartment properties to hit the market in 2026.
“We might see a little bit, but that wave of distress that we’re all kind of hoping for, we’re not seeing,” Andrew Kadish, CEO and chief investment officer of CAPREIT, told Multifamily Dive. “I don’t foresee that coming up.”
Kadish said investors were hoping to secure troubled properties over the past couple of years, but it hasn’t materialized.
“They thought we would see a lot of pending maturities,” Kadish said. “All these groups, six months into COVID, bought a ton of stuff at very high pricing.”
But so far, banks have worked with borrowers. “I think many lenders are very hesitant to take properties back and would rather just put it off for another 12 months,” Kadish said.
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