US CMBS Delinquency Rate Creeps Closer to 5.0% Level

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Trepp released its US CMBS Delinquency Report for September 2015, which highlights rate dropping by its largest amount this year.

CMBS Loan Totals - September 2015

We still expect an uptick in delinquencies in the near future as the brunt of peak era maturities come due, but the Fed’s rate hike procrastination should push off an increase.

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

The Trepp CMBS Delinquency Rate fell 17 basis points in September, which is the largest single-month improvement in the last 12 months. The delinquency rate for US commercial real estate loans in CMBS is now 5.28%, down 47 basis points year-to-date. Compared to the year-ago level of 6.03%, the rate is down 75 basis points.

In August, $1.4 billion in CMBS loans became newly delinquent, bringing total delinquencies to $27.5 billion. About $700 million in loans were cured last month while loans that were previously delinquent but paid off either at par or with a loss totaled over $1.3 billion.

“After negligible rate movement during the summer months, the CMBS delinquency rate’s slow march downward continued in September,” said Joe McBride, Research Associate at Trepp. “We still expect an uptick in delinquencies in the near future as the brunt of peak era maturities come due, but the Fed’s rate hike procrastination should push off an increase. If rates stay lower for longer, borrowers will refinance more easily with higher DSCRs all else equal. ”

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 dropped 13 basis points to 5.15% in August. If defeased loans were removed from Trepp’s delinquency calculation, the 30-day delinquency rate would be 5.58%.

By property type, delinquencies for all but one of the five major sectors descended in September. Industrial loans posted the largest month-over-month rate improvement, falling 144 basis points to 6.18%. While multifamily remains the worst performing major property type, the delinquency rate for the sector plunged 79 basis points to 8.20%. The only property type to weaken month-over-month was retail, as delinquencies jumped 20 basis points to 5.73%.

For additional details, such as delinquency status and historical comparisons, download the August 2015 US CMBS Delinquency Infographic at http://info.trepp.com/september-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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