CMBS delinquency rate decreases 17 basis points in June, breaks 4% threshold

Thanks to the continued resolution of distressed legacy debt and the brisk pace of new loans being originated and securitized, the overall Trepp CMBS Delinquency Rate broke through the 4 percent level in June, setting another new post-crisis low. The overall delinquency rate for U.S. commercial real estate loans in CMBS is now 3.95 percent, a decrease of 17 basis points from the May level.

The June 2018 rate is 180 basis points lower than the year-ago level. The June reading breaks the previous post-crisis low of 4.12 percent set in May 2018. The all-time high of 10.34 percent was registered in July 2012. The rate is 94 basis points lower in the year to date.

Breaking it down by property type, the industrial delinquency rate dipped 2 basis points to 4.67 percent and the lodging delinquency reading plunged 60 basis points to 2.32 percent. The office delinquency rate fell 36 basis points to 4.66 percent while retail delinquency rate moved up 6 basis points to 5.78 percent. It remains the worst-performing major property type. The multifamily delinquency rate inched 1 basis point higher to 2.28 percent and remains the best-performing major property type with a narrow lead over lodging loans.

Trepp believes the delinquency rate could approach the 3 percent level by the end of the year.