DBRS Morningstar CMBS Monthly Highlights—January Remittance: Overall Special Servicing and Delinquency Performance Remains Benign, Office Special Servicing Trends Higher

-- The delinquency rate for loans packaged in commercial mortgage-backed securities ticked up to 2.83% from 2.81% in December.
-- While much of the commercial real estate market has been bracing for higher delinquency rates because of market turbulence, rising interest rates, and slowing growth, the delinquency rate has posted just four rare upticks over the past 31 months.
-- Although January's overall delinquency rate tumbled far below the Coronavirus Disease (COVID-19) pandemic-era high of 10.17% and is much closer to the pre-pandemic low of 1.24% achieved in November 2019, the delinquency rate is likely to reach an inflection point as more office loans are transferred to special servicing, particularly as they mature and have to refinance at significantly higher rates and tighter lending standards.
-- Compared with year-ago levels, the hotel sector saw the largest percentage decline in delinquency rate, falling 3.55 percentage points, followed by retail with a decline of 1.07 percentage points.
-- The special servicing rate improved for the second consecutive month, declining 6 basis points (bps) to 5.41%, as hotel performance continues to improve. However, office posted another increase and now stands 101 bps higher than January 2022.
-- Distressed property sales remained muted, registering just $183.7 million, posting the second straight month below $200 million, an achievement unseen since 2009.
-- The maturity payoff rate began the year pretty much where it left off in 2022, registering just 60.2%, up slightly from 57.2% in December. Our 2023 outlook for the maturity payoff rate isn't much changed at roughly 60% because of persistent headwinds that will continue to challenge refinancing maturing loans.