Trepp April CMBS Delinquency Rate: It’s Time to Throw Out the Old Measurements

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The Trepp CMBS Delinquency Rate saw its biggest jump in almost three years in April 2020. The April reading is 2.29%, a jump of 22 basis points from March's reading.

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While an increase in the CMBS delinquency rate was probably expected by most industry watchers, the magnitude of the move likely surprised many by its modest size.

Trepp, a leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, has released the April 2020 U.S. CMBS Delinquency Report.

The report revealed a large increase in the delinquency rate and has newly updated fields to include loans categorized as “in grace period” or “beyond grace period.” The full report can be accessed here: https://www.trepp.com/instantly-access-april-2020-cmbs-delinquency-report.

Trepp’s CMBS Delinquency Rate saw its biggest jump in almost three years in April 2020. The April reading is 2.29%, a jump of 22 basis points over the March number. The last time the delinquency rate saw a bigger jump was in June 2017 – when the industry was still talking about the “wave of maturing” 2007 loans.

“While an increase in the delinquency rate was probably expected by most industry watchers, the magnitude of the move likely surprised many by its modest size,” said Trepp Senior Managing Director, Manus Clancy. “The delinquency rate was not a very big surprise to us (or most daily TreppWire readers) and therefore, it is necessary to throw out the old way of looking at the data.”

Most CMBS borrowers impacted by COVID-19 will not appear as “delinquent” until the May payment cycle. The reason for that is this: most borrowers made their March 1 payments as that payment was due before the COVID-19 headlines and shelter-at-home orders became widespread.

Many of these borrowers did not make their April 1 payments. But that did not make their loans delinquent. Instead – at that point – the loans were classified as either (A) “in grace period” or (B)“beyond grace period” in the servicer data, so we have included these figures in our delinquency report. Once borrowers miss their May 1 payment, they will become 30 days delinquent (unless the borrower is granted a forbearance).

The largest rate increase among property sectors in April belonged to the lodging sector, with its delinquency reading increasing 118 basis points to 2.71%. The number of lodging loans categorized as A/B increased to 20.39% in April, from 1.52% in March.

For additional details, such as historical comparisons, analysis on all major property types, an overview of loans newly specially serviced, and the status of loans in grace period or beyond, download Trepp’s April 2020 CMBS Delinquency Report: https://www.trepp.com/instantly-access-april-2020-cmbs-delinquency-report.

For daily CMBS and CRE commentary, follow @TreppWire on Twitter.

About Trepp
Trepp, founded in 1979, is the leading provider of information, analytics, and technology to the structured finance, 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 https://www.Trepp.com.

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Manus Clancy
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