CMBS Delinquency Rate Plunges Anew

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Trepp releases its May 2015 report: After six months of hovering within a 23-basis-point band, the Trepp CMBS Delinquency Rate broke sharply lower in May.

US CMBS Delinquency Rate

Conditions remain very favorable...every month we seem to see more trophy properties sell at record-level valuations.

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

Following a cumulative decrease of only nine basis points from January to April 2015, the US CMBS Delinquency Rate dropped 17 basis points in May. The delinquency rate for US commercial real estate loans in CMBS is now 5.40%, down 87 basis points from the year-ago level. May marks the 22nd time the rate has fallen in the last 25 months, and is the rate’s largest decrease since November 2014.

May’s delinquency rate saw 23 basis points of upward pressure added thanks to $1.2 billion in newly delinquent loans. Helping push the rate down were almost $700 million in loans cured, as well as $1.2 billion in previously delinquent CMBS loans that paid off either at par or with a loss. These totals moved the delinquency rate down by 13 and 24 basis points, respectively, as the previously distressed assets behind them were removed from the numerator of the delinquency calculation.

“Conditions remain very favorable for the CMBS new issue market as spread volatility was incredibly low in May,” says Manus Clancy, Senior Managing Director at Trepp. “Distressed legacy loans continue to get flushed through the system, and every month we seem to see more trophy properties sell at record-level valuations.”

After an increase in April, the percentage of seriously delinquent loans, defined as 60+ days delinquent, in foreclosure, REO, or non-performing balloons, fell 21 basis points to 5.23% in May. If defeased loans were removed from Trepp’s delinquency calculation, the 30-day delinquency rate would be 5.69%, another decrease of 21 basis points from April to May.

Out of the five major property types, lodging’s delinquency rate had the steepest drop month-over-month with a decrease of 38 basis points to 3.80%. The industrial sector had the second-largest rate reduction in May, falling to 7.50% with a 33-basis-point decline.
Though they are still the worst performing property sector, multifamily saw its delinquency rate drop 30 basis points to 8.62%.

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