US CMBS Delinquency Rate Creeps Lower in July

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Trepp released its July 2015 Delinquency Infographic, which highlights the month's rate change and breaks down the numbers by property type, delinquency status, and more.

Monthly CMBS Delinquency Rate Change

Although we expect the rate to continue downward, the pace of improvement may be much slower than we have seen over the past few years.

Trepp, LLC, the leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets, released its July 2015 US CMBS Delinquency Infographic today (available at http://info.trepp.com/thank-you-july-2015-cmbs-delinquency-infographic).

Following a small increase in June, the Trepp CMBS Delinquency Rate resumed its descent for the month of July. The delinquency rate for US commercial real estate loans in CMBS is now 5.42%, down three basis points for the month. The rate is now 62 basis points lower than the year-ago level and 33 basis points lower year-to-date.

In July, $1.4 billion in loans became newly delinquent while about $600 million in loans were cured. CMBS loans that were previously delinquent but paid off either at par or with a loss totaled over $800 million in July. Removing these previously distressed assets from the numerator of the delinquency calculation helped shave 15 basis points off of the rate.

“Despite the recent softening in new issue CMBS prices, the pipeline remains strong with issuance 25% ahead of last year’s pace,” said Trepp Research Associate Joe McBride. “Although we expect the rate to continue downward, the pace of improvement may be much slower than we have seen over the past few years. Add a potential rate hike to the mix and the delinquency rate may just bump along in the 5% range as more maturities send marginal loans to special servicing and default.”

The percentage of seriously delinquent loans, defined as 60+ days delinquent, in foreclosure, REO, or non-performing balloons, decreased along with the overall delinquency rate. The rate of seriously delinquent loans fell 10 basis points to 5.22% in July. If defeased loans were removed from Trepp’s delinquency calculation, the 30-day delinquency rate would be 5.73%.

With the exception of industrial loans, delinquency rates by major property type remained fairly stable in July. Lodging, which remains the best performing property sector, had the greatest drop month-over-month, falling five basis points to 3.70%. The industrial sector increased 29 basis points to 7.41%. Multifamily remains the worst performing property type, with a delinquency rate of 8.76%.

For additional details, such as delinquency status and historical comparisons, download the July 2015 US CMBS Delinquency Infographic at http://info.trepp.com/thank-you-july-2015-cmbs-delinquency-infographic. 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 dmgi, a division of the Daily Mail and General Trust (DMGT).

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Joe McBride
Trepp
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