US CMBS Delinquency Rate Drops for Seventh Consecutive Month

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Trepp has released its January 2018 CMBS Delinquency Report, which features analysis on why the delinquency rate fell again.

CMBS Delinquency Rate by Month

Fewer loans from the bubble years – mainly 2006 and 2007 – are defaulting, and those that did default are being resolved at a healthy pace.

Trepp, LLC, a leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, has released its January 2018 US CMBS Delinquency Report. The full report can be found here: http://info.trepp.com/january-2018-cmbs-delinquency-report-press-release.    

After improving each month during the second half of 2017, the Trepp CMBS Delinquency Rate continued that trend to begin 2018. The delinquency reading fell six basis points to 4.83% in January, marking the seventh straight month in which the rate has decreased. The rate has consistently dropped in recent months thanks to most of the bubble-year loans from 2006 and 2007 meeting resolution after maturity.

“Though it may be a new year,” said Manus Clancy, Senior Managing Director at Trepp, “January’s delinquency rate moved in the same direction as it did in the previous six months. Fewer loans from the bubble years – mainly 2006 and 2007 – are defaulting, and those that did default are being resolved at a healthy pace. Further rate drops can be anticipated as the first half of 2018 progresses.”

Delinquency readings for three of the five major property types decreased last month. January’s largest drop belonged to the office sector as its rate plunged 56 basis points to 5.84%. The multifamily delinquency rate – already the lowest among major property sectors – fell another 28 basis points to 2.08% last month. The largest increase of the month was noticed in the lodging sector, as hotel delinquencies increased 69 basis points to 4.51%.

Nearly $1.35 billion in CMBS loans turned newly delinquent in January, a substantial increase from the roughly $800 million that became delinquent in December. The volume of loans cured last month only totaled $290 million, while the volume of previously delinquent CMBS debt that was resolved with a loss or at par came in at $800 million. Although there were more new delinquencies in January than loans that were cured and resolved, a large swath of newly issued loans were added to the calculation and accounted for the difference.

For additional details, such as delinquency status and historical comparisons, download the January 2018 US CMBS Delinquency Report: http://info.trepp.com/january-2018-cmbs-delinquency-report-press-release. For daily CMBS commentary, follow @TreppWire on Twitter.

About Trepp
Trepp, LLC, founded in 1979, is a leading provider of data, analytics, and technology solutions to the global securities and investment management industries. Trepp specifically serves three key sectors: structured finance, commercial real estate, and banking to help market participants meet their objectives for surveillance, credit risk management, and investment performance. Trusted by the industry for the accuracy of its proprietary data, Trepp provides clients sophisticated, comprehensive models and analytics. Trepp is wholly owned by dmg Information, the business information division of Daily Mail and General Trust (DMGT). For more information, visit http://www.Trepp.com.

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Sean Barrie
Trepp
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