Delinquent Office Loans at Five-Year High Trouble Commercial Mortgage Bond Market
- Commercial mortgage bond yields remain among highest in decade
- Demand drops for office-backed bonds as refinancing need grows
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Near-empty office buildings, already a problem plaguing US cities, are becoming a worry for mortgage bondholders as landlords fall behind on repayments at the fastest rate in five years and the difficulty of refinancing the loans grows.
The work-from-home phenomenon spawned by the Covid-19 pandemic and a slowing economy are pushing tenants to cancel or not renew leases, making building owners miss loan payments. More than 4% of office loans packaged into securities were at least 30 days in arrears as of May, the highest level since 2018, according to a recent report from real estate data firm Trepp.