Other - AUGUST 8, 2017

CMBS delinquency rate decreases 26 bps in July

by Jody Barhanovich

The U.S. CMBS delinquency rate decreased to 5.49 percent in July, according to Trepp. It is a decrease of 26 basis points from June.

The July rate is now 73 basis points higher than the year-ago level, and 26 basis points higher year-to-date. The reading hit a multi-year low of 4.15 percent in February 2016. The all-time high was 10.34 percent in July 2012.

After hitting a post-crisis low in February 2016, the CMBS delinquency rate has consistently climbed since early 2016 as loans from 2006 and 2007 have reached their maturity dates and have not been paid off via refinancing. The rate has moved up in 13 of the past 17 months.

Delinquency rates for four of the five major property types fell in July, with the lodging sector being the only one to increase, jumping 15 basis points to 3.68 percent. The industrial delinquency rate moved down 61 basis points to 6.96 percent, while the multifamily delinquency rate dropped 101 basis points to 2.91 percent. Meanwhile, the office delinquency rate fell 43 basis points to 7.24 percent, and the retail delinquency rate decreased 2 basis points to 6.63 percent.

About $1.4 billion in loans became newly delinquent in July. Almost $1.2 billion in loans were cured last month, and about $1.7 billion in CMBS loans that were previously delinquent were resolved with a loss or at par. The percentage of loans that are seriously delinquent is now 5.43 percent, down 22 basis points for the month. However, if defeased loans were taken out of the equation, the overall 30-day delinquency rate would be 5.62 percent, down 30 basis points from June.

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