Trepp CMBS Delinquency Rate Sees Biggest Drop in More Than Four Years

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The Trepp CMBS Delinquency Rate posted its largest drop in more than four years, due to having more than $8 billion in loans ‘cured’ or revert to current in July.

The overall CMBS delinquency rate fell by 72 basis points month over month, down to 9.60%, which represents the largest decline in that reading since January 2016.

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

The report revealed that the delinquency rate saw the largest drop in more than four years, due to having more than $8 billion in loans ‘cured’ or revert to current in July. The full report can be accessed here: https://www.trepp.com/instantly-access-july-2020-cmbs-delinquency-report.

The overall CMBS delinquency rate fell by 72 basis points month over month, down to 9.60%, which represents the largest decline in that reading since January 2016.

About 1.7% of that number is represented by loans in the 30-day delinquency bucket while another 2.56% is now 60 days delinquent. Both of those numbers were sizable improvements from June. The percentage of loans that are 90 or more days delinquent, on the other hand, rose from 0.29% in June to 2.65% in July.

“As we reported in TreppWire in mid-July, some of the improvements came via loan modifications such as a maturity extension,” said Trepp’s Senior Managing Director, Manus Clancy. “Additional benefit came via reserve relief, whereby borrowers were permitted to use reserves to keep the loan current.”

There was a large swath of loans that were cured in July for which it was unclear whether the loan became current by way of reserve relief or by the borrower bringing the loan current out of pocket. We will be looking for more evidence of this as August remittances are released.

In terms of loans in grace period, 2.83% of loans by balance missed the July payment but were less than 30 days delinquent. The percentage of loans in or beyond grace period (the A/B loans, as we refer to them) fell to 7.6% in May from 8.1% in April. It moved even lower to 4.10% in June before July’s decline.

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 July 2020 CMBS Delinquency Report: https://www.trepp.com/instantly-access-july-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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Hayley Keen
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