Where commercial and multifamily owners stand
All in all, a whopping 95.2% of outstanding loan balances were current in May. Just 3.1% were 90 or more days delinquent, while 1.7% were delinquent between 1 and 89 days.
Multifamily and industrial borrowers appear to be positioned best, with just 1.8% and 1.9% of mortgage loans non-current in these categories last month, respectively.
Surprisingly, office-backed loans were also among the most current in May, despite many employers still operating remotely. A mere 2.4% of office-secured mortgages were delinquent for the month, down from 2.6% of all office loans in April.
“Quarterly measures of delinquency rates between last year's fourth quarter and this year's first quarter show a drop in distress across nearly every capital source,” said Jamie Woodwell, the MBA's vice president of commercial real estate research.
The recovery isn't strong across the board, though. While loans on office properties, apartments, senior living facilities, and industrial buildings are showing the lowest delinquency rates and fastest recoveries, "Pockets of elevated stress remain in loans backed by lodging and retail properties," Woodwell said.
One in five loans secured by lodging or retail properties was delinquent last month. That was down just slightly from the 20.2% rate seen last month. In the retail space alone, 9.5% were in some stage of delinquency -- a slight increase from April's 9.3% rate.
As a result of these drops, delinquency rates on commercial mortgage-backed securities (CMBSs) are higher than in other categories. According to the MBA, CMBSs contain a high concentration of hotel and retail loans. About 8.2% of CMBS balances were non-current in May.
Loans backed by student housing and healthcare facilities are also recovering slower than other categories, according to the data.
The bottom line
Investors haven't fully recovered from the devastating financial impacts of the pandemic yet, but according to the latest data from the MBA, it seems things -- at least for the most part -- are moving in the right direction.
Throw in the recent forbearance extensions offered to multifamily borrowers (on Fannie Mae- and Freddie Mac-backed properties), the multitude of legal claims against the CDC eviction ban, and rebounding rents, and there's finally something to be optimistic about.