US CMBS Delinquency Rate Concludes 2018 in Positive Fashion

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Trepp has released its December 2018 CMBS Delinquency Report which highlights the rate’s latest decrease.

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Delinquencies should continue to fall for at least another six months as the last remnants of CMBS 1.0 are resolved.

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

As it did nine other times in 2018, the Trepp CMBS Delinquency Rate declined in December. The reading dropped 22 basis points to 3.11% and has now improved in 16 of the last 18 months. December’s rate is a new post-crisis low. The reading has decreased by 178 basis points year over year.

“The CMBS sector couldn’t avoid the gravitational pull of wider fixed income spreads in Q4,” said Manus Clancy, Senior Managing Director at Trepp, “but it avoided most of the pain witnessed in the high-yield and leveraged loan markets. That bodes well for CMBS going forward. We foresee a slow start to new issuance in 2019 followed by an acceleration in pace as the markets stabilize. Delinquencies should continue to fall for at least another six months as the last remnants of CMBS 1.0 are resolved.”

After a two-basis-point jump in November, the CMBS 2.0+ delinquency rate declined two basis points to 0.62% in December. Delinquencies in CMBS 1.0 slid 47 basis points to 45.98% last month. The CMBS 1.0 delinquency rate benefitted from large drops among property types in those vintages, such as a 754-basis-point plunge among lodging loans (now at 42.03%) and a 682-basis-point slide in the industrial reading (44.76%).

Delinquency readings for all five major property types improved in December. The largest month-over-month improvement by property type was observed in the industrial sector as the industrial delinquency rate dipped 61 basis points to 2.39%. Next up was the lodging segment as its reading shed 38 basis points to 1.51%. Hotels remain the best performing major property type.

For additional details, such as historical comparisons and analysis on potential future rate moves, download the December 2018 US CMBS Delinquency Report: https://info.trepp.com/december-2018-cmbs-delinquency-report-pr. 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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