Commercial And Multifamily Delinquencies Fell In Q4 2021

Delinquencies on commercial and multifamily mortgages fell in Q4 2021, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report.

Outstanding loan balances that were current on their payments rose from 96.7% to 97%, with only 1.9% 90 or more days delinquent or in REO, down from 2.2%.

Loans 60-90 and 30-60 days delinquent saw no change, at 0.2% and 0.3% respectively. Loans that were less than 30 days delinquent fell 0.1% to 0.7%.

Lodging and retail properties continued to be the most delinquent but saw improvement in Q4. For lodging loans, delinquencies fell 3.5% to 10.5%, while delinquent retail loans fell from 8.2% to 7.6%.

CMBS loans also saw improvement, with 5.7% of balances non-current, down from 7.2% in Q3.

“The fourth quarter saw continued improvement in the performance of commercial and multifamily mortgages, particularly among property types that were the most impacted by the downturn,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. 

“The share of outstanding balances that are delinquent fell for both lodging and retail properties, as property owners and lenders and servicers continue to work through troubled deals. The share of loan balances becoming newly delinquent was the lowest since the onset of the pandemic.”

Multifamily properties are expected to be a hot commodity in the coming year. In its 2022 US real estate market outlook, CBRE predicted that the multifamily sector is “set for a record-breaking 2022 amid solid fundamentals and heightened investor interest. With tremendous liquidity and a growing range of debt options available, multifamily pricing will be as strong as ever.”

A multifamily portfolio with 274 units in Los Angeles’ San Gabriel Valley recently sold for $68 million.

“This portfolio signals an extraordinarily strong demand for the multifamily market, particularly those that offer a value-add reposition play. There is also a limited quantity of large property types like this on the market. All of this, coupled with low-interest rates, excess liquidity and high demand, created a tremendous appetite for this portfolio,” Lee & Associates’ Warren Berzack, who represented both parties in the sale, said in a statement.