DBRS Morningstar CMBS Monthly Highlights—September Remittance: CMBS Delinquency and Maturity Payoff Rates Post Rare Improvements

-- The delinquency rate for loans packaged in U.S. commercial mortgage-backed securities (CMBS) declined for the first time in six months, dropping 14 basis points (bps) to 3.97% in September after rising 112 bps over the previous five months.
-- The office delinquency rate rose for the ninth straight month while retail and hotel both fell.
-- The special servicing rate rose for the eighth month in a row, inching up 9 bps to 7.21%, its highest level since October 2021.
-- The office special servicing rate has risen for nine straight months, increasing 59 bps to 9.10% in September 2023, and has more than doubled from 3.69% in September 2022.
-- After rising above $400 million in August for the first time in 15 months, liquidations fell to $388.6 million, resulting in $217.4 million in losses and a 55.9% loss severity. Many special servicers continue to hold on to the debt for longer and work out situations with borrowers.
-- The maturity payoff rate rose for the first time in eight months, jumping 26.7 percentage points to 60.6% in September from 33.9% in August 2023 as nearly 95% of maturing retail loans successfully paid off. Office continued to lag, posting a just an 11.1% successful payoff rate, while multifamily declined to 71.7%, its lowest level since March 2023.
-- The year-to-date (YTD) maturity payoff rate stands at 50.0%. DBRS Morningstar's 2023 outlook for the maturity payoff rate stands at roughly 50% to 55% as investors and lenders continue to shy away from maturing office, mall, and mixed-use loans.