Office CMBS Delinquency Rate Hits Record 11.7%, Exceeding Financial Crisis Peak
By
mooreds
A baker's-dozen of insight crammed into one ring.
Summary
Office CMBS delinquency rates reached a record high of 11.7% in August, surpassing even the peak levels seen during the 2008 financial crisis. Multifamily delinquencies also spiked significantly. The article details how lenders are using 'extend-and-pretend' and forbearance strategies to avoid taking ownership of distressed properties, hoping for better market conditions, lower interest rates, and increased demand to prevent massive losses.
Key quotes
· 4 pulledThe delinquency rate of office mortgages that have been securitized into commercial mortgage-backed securities (CMBS) spiked to 11.7% in August, the worst ever
Extend-and-pretend and forbearance deals widely implemented to 'cure' delinquent CRE mortgages
The office and multifamily sectors of commercial real estate loans got further bludgeoned in August, despite large-scale extend-and-pretend and forbearance deals
Lenders don't end up with the property and a huge loss
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