DBRS Morningstar CMBS Monthly Highlights—November Remittance: CMBS Delinquency and Special Servicing Rates Rise, Maturity Payoff Rate Declines Amid Uncertainty

-- The delinquency rate for loans packaged in U.S. commercial mortgage-backed securities (CMBS) rose 16 basis points (bps) to 4.19% in November; it is up 138 bps since the beginning of the year.

-- The office and retail delinquency rates dropped while the multifamily, industrial, and hotel delinquency rates rose.

-- The special servicing rate increased for the ninth month in a row, inching up 1 bp to 7.26%, its highest level since October 2021.

-- The office special servicing rate rose for the 11th straight month, jumping 37 bps to 9.86% in November 2023, and has more than doubled from 4.06% in November 2022.

-- Liquidation volume fell to $85.1 million in November from $232.1 million in October, resulting in $38.1 million in losses and a 44.8% loss severity. Many special servicers continue to hold on to the debt for longer and work out situations with borrowers as many lenders and investors continue to shy away from the sector amid market volatility.

-- The monthly maturity payoff rate continues to underperform, dropping 11.2% percentage points to 52.0% in November from 63.2% in October 2023. Multifamily lagged with a 24.5% successful payoff rate, while retail outperformed with a 78.9% payoff rate. Office posted an above average 67% successful payoff rate.

-- The year-to-date (YTD) maturity payoff rate stands at 51.0%. 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.

-- Our outlook for the 2024 maturity payoff rate isn't much changed from 2023 at 55% to 60% as office borrowers face another tough year.