US CMBS Delinquency Rate Drops Again in September

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Trepp has released its September 2018 CMBS Delinquency Report which highlights one of the largest improvements for the reading this year.

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The volume of new issuance has exceeded expectations while remnants of distressed legacy debt have been closed out...Throw in some impressive spread tightening and it all adds up to a great September for the CMBS market.

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

The Trepp CMBS Delinquency Rate fell 23 basis points to 3.41% in September. This marks the 14th time in the last 15 months that the reading has improved. September’s rate drop is the third-largest decrease observed in 2018 and breaks the previous post-crisis low set in August. The main factors contributing to the continued rate improvement are the lively pace of new issuance and the resolution of distressed legacy loans.

“The wind continues to remain at the back of the CMBS market,” said Trepp Senior Managing Director, Manus Clancy. “For the last nine months, the volume of new issuance has exceeded expectations while remnants of distressed legacy debt have been closed out. That combination has helped drag the delinquency rate lower throughout 2018 and should continue for the rest of the year. Throw in some impressive spread tightening and it all adds up to a great September for the CMBS market.”

After inching up in August, the CMBS 2.0+ delinquency rate dropped nine basis points to 0.50% last month. The reading was driven down thanks to nearly $400 million in debt – all tied to a loan piece backed by 123 Toys “R” Us properties – being made current on its payments. Delinquencies in CMBS 1.0 fell four basis points to 46.75% in September. The rate of serious delinquencies in both CMBS 1.0 and 2.0+ moved higher last month, albeit marginally.

September’s largest month-over-month improvement by major property type was the industrial delinquency rate sliding 108 basis points lower to 2.98%. Although it remains the worst performing property type, the retail delinquency reading shed 46 basis points to 5.01% last month. The only major property type to finish the month with a higher rate was the lodging sector as that reading jumped five basis points to 2.27%.

For additional details, such as historical comparisons and analysis on potential future rate moves, download the September 2018 US CMBS Delinquency Report: https://info.trepp.com/september-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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