US CMBS Delinquency Rate Reaches Post-Crisis Low in May

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Trepp has released its May 2018 CMBS Delinquency Report which examines how the delinquency rate fell to its lowest level since 2008.

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The combination [of healthy issuance and distressed legacy loan resolutions] has pushed the delinquency rate down sharply and should continue to do so.

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

The Trepp CMBS Delinquency Rate reached a major milestone last month and established a new post-Financial Crisis nadir. The overall delinquency rate for US commercial real estate loans in CMBS fell 24 basis points to 4.12% in May. The May 2018 reading is now 135 basis points lower year over year and represents a decrease of more than 600 basis points from its all-time high.

“Many market watchers worried that a 10-year Treasury rate greater than 3% could lead to problems for the commercial real estate markets,” said Trepp Senior Managing Director, Manus Clancy. “Early indications are that it has not, as issuance continues to be healthy and distressed legacy loan resolutions have maintained their lively pace,” Clancy added. “The combination has pushed the delinquency rate down sharply and should continue to do so.”

The office sector boasted the largest month-over-month rate drop among major property types last month as its reading shed 55 basis points to 5.02%. To boot, the office delinquency rate has improved more than any other major property sector over the past year thanks to a decrease of 295 basis points. Retail delinquencies fell 25 basis points to 5.72% in May while the industrial rate slid 16 basis points to 4.69%.

The CMBS 2.0+ delinquency rate inched down seven basis points to 0.48% in May. Just 0.39% of 2.0+ debt was marked as seriously delinquent last month as that reading dropped 12 basis points. The overall CMBS 1.0 delinquency rate ended May with a rate of 47.14%, 24 basis points lower month over month. The rate of serious delinquencies in the 1.0 universe decreased 13 basis points to 47.13% last month.

For additional details, such as historical comparisons and analysis on potential future rate moves, download the May 2018 US CMBS Delinquency Report: http://info.trepp.com/may-2018-cmbs-delinquency-report-press-release. 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. From its offices in New York, San Francisco and London, Trepp serves its clients with products and services to support trading, research, risk management, surveillance and portfolio management. Trepp is wholly-owned by 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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