US CMBS Delinquency Rate Drops in May as More Legacy Loans Are Resolved

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Trepp has published its May 2019 CMBS Delinquency Report that underscores the quick pace of loan resolutions.

The CMBS market has remained remarkably resilient in the face of recent volatility.

Trepp, LLC, a leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, has released its May 2019 US CMBS Delinquency Report. The full report can be accessed here: https://www.trepp.com/download-trepp-may-2019-delinquency-report.

The Trepp CMBS Delinquency Rate has reached a post-financial crisis low yet again, falling 16 basis points to 2.66% in May. The delinquency rate has decreased by 146 basis points year over year, with the rate falling in 20 of the last 23 months since June 2017.

“The CMBS market has remained remarkably resilient in the face of recent volatility,” said Trepp Senior Managing Director, Manus Clancy. “Spreads have widened, but only minimally even though tariffs and trade rhetoric have taken their toll on other markets. CMBS issuance continues to march on, and as we’ve seen for the last two years, CMBS delinquencies continued to drop in May.”

The largest rate drop among major property sectors in May belonged to the retail space, with its delinquency reading dropping 33 basis points to 4.29%. Multifamily delinquencies climbed 17 basis points to 2.16% last month. The lodging delinquency reading dropped 13 basis points to 1.42% and it remains the best performing major property type. The office delinquency rate also fell by 13 basis points, reaching 2.98%.

The overall CMBS 2.0+ delinquency rate jumped four basis points in May to 0.74%, while the percentage of CMBS 2.0+ loans in serious delinquency was up eight basis points to 0.64%. The CMBS 1.0 delinquency rate declined by 209 basis points to 44.37%. Since no legacy loans were marked as 30 days delinquent, the percentage of 1.0 debt considered seriously delinquent was also down 209 basis points to 44.37%. Previously delinquent loans that were resolved with losses are responsible for the big drops in the CMBS 1.0 delinquency figures.

For additional details, such as historical comparisons and analysis on all major property types, download the May 2019 US CMBS Delinquency Report: https://www.trepp.com/download-trepp-may-2019-delinquency-report. For daily CMBS commentary, follow @TreppWire on Twitter.

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Sean Barrie
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