US CMBS Delinquency Rate Continues to Drop in 2015

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The Trepp CMBS Delinquency Rate picked up where it left off in 2014, decreasing in January.

January 2015 Percentage of Loans 30+ Days Delinquent

Trading volume is up while delinquencies and rates are down - these are all good signs for continued strength in 2015.

Trepp, LLC, the leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets, released its January 2015 US CMBS Delinquency Report today (available at http://www.trepp.com/knowledge/research).

The Trepp CMBS Delinquency Rate picked up where it left off in 2014, with another monthly decrease. The delinquency rate for US commercial real estate loans in CMBS is now 5.66%, down nine basis points in January and 159 basis points from the year-ago level. This drop marks the 18th time the rate has decreased in the last 20 months.

In January, $1.2 billion in previously delinquent CMBS loans paid off either at par or with a loss, and over $500 million in loans were cured. This combination helped push delinquencies lower by 32 basis points. Conversely, almost $1.5 billion loans became newly delinquent in January, which put significant upward pressure on the rate.

Trepp’s Senior Managing Director Manus Clancy said that “several new conduits and a handful of single asset deals made the rounds in the second half of the month. The issuance engine is kicking into gear after a few weeks interrupted by the CREFC conference in Miami and snowstorms in the Northeast.”

Across property types, lodging continues to be the best performing asset class, with a delinquency rate of 4.40%, down 37 basis points in January. The industrial delinquency rate saw the second-largest decrease last month, with a 35-basis-point drop to 7.20%. The office delinquency rate was the only major property type to weaken in January, with a 10-basis-point increase to 6.18%.

“Trading volume is up while delinquencies and rates are down,” said Trepp Research Associate Joe McBride. “These are all good signs for continued strength in 2015.”

The CMBS market came out of the gate hot to start 2015 and conditions remain encouraging for elevated issuance activity. There is a plethora of 2015 loans that need refinancing, the ten year treasury yield continues to fall, and spread volatility has been modest. These factors mean investors and issuers should remain busy for the foreseeable future.

For additional details, such as delinquency status and historical comparisons, request the January 2015 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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