The delinquency rate for commercial mortgage-backed securities has hit 12.3%, almost 1 in 8.
This is higher than it was in the worst parts of the Great Recession.
Fasten your seat-belts, we are in for a bumpy ride.
The delinquency rate of office mortgages that have been securitized into commercial mortgage-backed securities (CMBS) spiked by over a percentage point in January to 12.3%, once again the worst ever, and 1.6 percentage point above the worst moments of the Financial Crisis, according to data by Trepp , which tracks and analyzes CMBS.
The CMBS were sold to institutional investors around the world, such as pension funds, bond funds, insurers, etc. The banks that originated the loans are off the hook.
High vacancy rates in new fancy office towers allow companies to move from an old tower to a new tower when the lease expires, thereby upgrading and downsizing at the same time. This “flight to quality” is pulling the rug out from under older office buildings.
This game of musical chairs is about fail catastrophically.
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