NEW YORK CITY-In a development that appears to defy the recent trend toward moderating increases in the CMBS delinquency rate, November’s rate shot up by 35 basis points, the steepest increase since May, says data firm Trepp. This follows a month in which the delinquency rate actually saw its first decline in more than a year. However, Mission Capital Advisors’ William David Tobin sees the rise as another manifestation of the bifurcation in the national market’s recovery.

“The November numbers certainly throw some cold water on the enthusiasm that has been building over the past six months that the peak for delinquencies was nearing,” says Manus Clancy, managing director at Trepp, in a release. November’s increase puts the delinquency rate at 8.93%, just behind the all-time record of 9.05% set in September, according to Trepp. Prior to that, the monthly increase had tapered off from the 40-bps jump recorded in May to an average of 10 to 20 bps, culminating in a 47-bps drop in October.

However, Trepp points out that the October decline was due to a single resolution: the Extended Stay Hotels portfolio loan. “Prior to its resolution, that loan accounted for about 50 basis points in the delinquency calculation,” according to Trepp. “Along these same lines, once the $3-billion Stuyvesant Town loan is resolved, there will be another 40 bps worth of delinquencies removed in one fell swoop.”

Such large-scale securitizations aside, “CMBS consists largely of B- and C-quality underlying real estate,” says Tobin, principal at Mission Capital. “A-quality tends to gravitate toward insurance companies. The recovery is sort of a recovery of the haves and have-nots.”

The class A properties with class A tenants “tend to do okay, with capital seeking those out and pushing down cap rates and pushing up trade prices,” Tobin says. “It’s the B- and C-quality retail centers, office and industrial where the recovery really hasn’t taken great hold. They had lower-quality fundamentals to begin with, and the flaws in those sorts of properties get exposed a little more when you really have a marginal recovery.”

The bifurcation exists not only between investment-grade and second-tier assets, but also between gateway markets and the rest of the US. “That tends to skew the figures,” says Tobin. “You hear about these buildings trading at aggressive cap rates in New York, San Francisco and Washington, DC, and maybe in Los Angeles and Chicago. But when you move out into the other primary cities, and the secondary and tertiary markets, there’s still a lot of distress. So you’ve got a barbelling in the geography and in the asset quality. Those two factors are weighing heavily on CMBS.”

With the Extended Stay loan resolved, the lodging sector moves out of first place among worst-performing property types. Trepp puts the multifamily delinquency rate at 15.8%, compared to 14.56% for hotel. Retail’s a distant third with a 7.59% delinquency rate, followed by office at 6.95% and industrial at 6.64%.

Separately, the Mortgage Bankers Association on Wednesday said that the CMBS delinquency rate, which MBA measured at 8.58% as of the end of the third quarter, is the highest since the association began keeping track in 1997. Delinquency rates for other commercial mortgage types are faring better. “Although weak, the economic recovery is just beginning to be seen in commercial real estate fundamentals and the mortgages they support,” says Jamie Woodwell, MBA’s VP of commercial real estate research, in a release.

Clancy notes that November’s jump occurred “despite the fact that new issues are starting to make their way into the calculation and the special servicers are becoming more adept at processing the troubled loans.” Although both factors will “continue to put downward pressure” on the delinquency rate, he adds, “it would not surprise us if the rate continued to bounce around a bit as it continues to rise over the next several months.”