US CMBS Delinquency Rate Breaks 6%, Reaches Lowest Rate in Five Years

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Following a significant increase in October, the Trepp CMBS Delinquency Rate posted its biggest drop in 10 months in November.

Percentage of Loans Delinquent for 30+ Days

The CMBS market is heading into year-end with a lot of momentum. New issue volume is poised to top last year’s total and delinquency levels continue to drop.

Trepp, LLC, the leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets, released its November 2014 US CMBS Delinquency Report today (available at http://www.trepp.com/knowledge/research).

Following a significant increase in October, the Trepp CMBS Delinquency Rate posted its biggest drop in 10 months in November. The rate decreased 34 basis points last month, bringing the overall delinquency rate for US commercial real estate loans in CMBS to 5.80%. November’s rate is now the lowest level in five years. Year-to-date, delinquencies have fallen 163 basis points from 7.43% in December of 2013.

According to Senior Managing Director Manus Clancy, the CMBS market is “heading into year-end with a lot of momentum. New issue volume is poised to top last year’s total and delinquency levels continue to drop. Throw in lower energy costs and a drop in the 10-year yield and you could say the wind is fully at the market’s back.”

There are currently $30.7 billion in delinquent loans, about $1.1 billion lower than at the end of October. Over $900 million in loans became newly delinquent in November, but a large “denominator effect” added to the rate’s improvement. New issues added to the Trepp deal universe in November increased the denominator of the delinquency rate calculation by about $7 billion after taking into consideration the removal of paid off and resolved loans.

“Servicers and issuers showed no sign of tryptophan overdose in November” as the delinquency rate fell below the 6% threshold for the first time since the downturn,” said Joe McBride, Research Associate. “Continued improvement in collateral performance bodes well for next year which will have to be strong issuance-wise to handle the beginning of the boom era maturities.”

For additional details, such as delinquency status and historical comparisons, request the November 2014 US CMBS Delinquency report at http://www.trepp.com/knowledge/research. For daily CMBS commentary, follow @TreppWire on Twitter.

About Trepp
Trepp, LLC, founded in 1979, is the leading provider of information, analytics and technology to the CMBS, commercial real estate and banking markets. Trepp provides primary and secondary market participants with the web-based tools and insight they need to increase their operational efficiencies, information transparency and investment performance. Trepp serves its clients with products and services to support trading, research, risk management, surveillance and portfolio management. Trepp is wholly-owned by dmg b2b, a division of the Daily Mail and General Trust (DMGT).

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Joe McBride
Trepp
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