CMBS Delinquency Rate Resumes Trend of Improvement in September

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The Trepp CMBS delinquency rate got back on track in September after August's reading interrupted its consistent month-over-month improvement.

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CMBS delinquency rates have begun to fall again, the forward calendar is busy, and the new issue inventory was absorbed without any impact on spreads.

Trepp, LLC, the leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets, released its September 2014 US CMBS Delinquency Report today (available at http://www.trepp.com/knowledge/research).

The Trepp US CMBS delinquency rate returned to its pattern of consistent month-over-month improvement in September, as it fell seven basis points to 6.03%. The decrease follows a six-basis-point increase in August, which was the first upward movement in the rate since May 2013. The delinquency rate has now fallen 140 basis points so far in 2014.

“CMBS loan liquidations revved up again in September, doubling month-over-month, which helped to push more delinquent loans out of the pool,” said Joe McBride, Research Analyst at Trepp. “September also brought a flood of new issuance that was easily digested by investors. These new deals bode well for the delinquency rate going forward.”

Contributing to the improvement in delinquencies was the continued high rate of defeasances in September. Over $1.9 billion commercial real estate loans in CMBS became newly defeased last month. Trepp data shows that loans from the 2011 and 2012 vintages are increasingly becoming defeased.

New delinquencies limited the downward movement in the rate, as almost $1.4 billion in loans became 30+ days delinquent in September. Included in this pool were two loans with balances of over $100 million each.

“The CMBS market is heading into the fourth quarter with a fair amount of momentum,” said Manus Clancy, Senior Managing Director at Trepp. “CMBS delinquency rates have begun to fall again, the forward calendar is busy, and the new issue inventory was absorbed without any impact on spreads.”

September’s lower delinquency rate is consistent with Trepp’s projection of modest gains in 2014 and 2015.

For additional information, such as delinquency status, historical comparisons, and delinquency rates by property type, request the September 2014 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 Information, a division of the Daily Mail and General Trust (DMGT).

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Joe McBride
Trepp
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