Chicago CMBS delinquency rate tops national average

The delinquency rate on commercial mortgage-backed securities loans in the Chicago area is higher than the national average thanks to some particularly bad deals made during the recession.

The delinquency in Chicago is 5.25 percent, up from 5.22 percent year over year but still a steep drop from its peak of 10.3 percent in 2013, according to Crain’s.

That rate gives Chicago the third-highest CMBS delinquency rate in the country, behind only Philadelphia and Washington, D.C. Most large cities have rates below 2 percent, including New York (1.2 percent) and Los Angeles (0.9 percent). The national rate in 2018 is 3.8 percent.

The rate in the Chicago market is so high because some bad loans taken out during the height of the recession and foreclosure crisis are taking a long time to resolve, experts told Crain’s.

One example is the former AT&T offices in Hoffman Estates, which still has a $114 million balance on its loan despite being targeted by Somerset Development for a massive redevelopment. That loan alone accounts for nearly a full percent point of the area’s delinquency rate.

The good news is that the majority of the market’s delinquent loans on commercial mortgage-backed securities are more than 10 years old, meaning that once they are resolved, the local market should see improvements. [Crain’s] — Joe Ward