Delinquencies on office loans rose 56 basis points between September and October to reach 10.35%, its highest level since August 2012, according to a recent report from Moody’s Ratings. The debt is due, and landlords are late.
The overall commercial delinquency rate ticked up from 6.88% to 6.94%, representing an increase of $1.93 billion. That was mostly fueled by $831.1 million in office loans. Delinquencies rose for multifamily, or apartment loans, but it dropped for retail, hotels, and industrial loans, according to the report. So it seems office is still the elephant in the commercial real estate room.
Five of the 10 largest newly delinquent loans were office loans. Not to mention, the office delinquency rate was pushed higher by five loans with outstanding balances above $50 million becoming newly delinquent; and three of the five largest loans to become delinquent were office loans with outstanding balances above $95 million, according to the report.
