Delinquency rates for mortgages secured by hotels rose during December compared with November, but the performance of retail property loans improved, according to reports. However, when it comes to late payments for all property types, the research from Fitch Ratings, Trepp and the Mortgage Bankers Association differs.
Fitch reported a 4-basis-point decline to 4.69% in December 2020 among the deals it rates, from 4.73% in November. However, that number was a sharp increase from the 1.45% recorded at the end of 2019. This was due to strong new issuance volume during the month, adding it was the second consecutive month of decline.
According to Trepp, the delinquency rate fell to 7.81% in December from 8.17% in November. This marks six consecutive months of decline among this group. In December 2019, the delinquency rate was 2.34%.
The MBA’s CREF Loan Performance Survey reported that approximately 6% of these loans were late on their payment in December, up from 5.7% in November. However, the increase was almost entirely from newly delinquent loans, as those reported less than 30 days late on their payments rose to 1.5% in December from 1% in November.
“The added stress from a winter wave of the virus has weakened the economy and challenged some owners, as property income has been disrupted,” said Jamie Woodwell, the MBA’s vice president of commercial real estate research. “Last month’s rise in commercial mortgage delinquencies reinforces that many challenges remain between now and when the economy can fully reopen.”
For mortgages in CMBS only, the MBA’s survey found a slight increase in delinquencies, to 10.5% in December from 10.4% in the prior month.
Hotel property delinquencies among Fitch-rated CMBS transactions rose to 18.38% in December, up from 17.33% in November and 1.41% at the end of 2019. According to the MBA, 22.5% of the balance of lodging loans were not current in December, up from 22.1% in November. For Trepp, 19.8% of these loans were 30 days or more late in December, compared with 19.66% in November and 1.53% 12 months prior.
But for retail, the other property type hardest hit by the pandemic, all three measures reported an improvement in performance on a month-to-month basis.
Fitch’s December delinquency rate for retail was 10.98%, down from 11.11% in November, while the MBA had it at 11.9%, down from 12.9%. Trepp reported a 12.94% delinquency rate for retail properties in December, compared with 14.21% for the prior month.