CMBS delinquency rate drops 19 bps in October
The Trepp CMBS Delinquency Rate dropped sharply in October, marking the fourth straight month in which it has fallen. The delinquency rate for U.S. commercial real estate loans in CMBS is now 5.21 percent, a decrease of 19 basis points from the September level. That is the second-largest rate drop measured in the last 19 months.
After hitting a post-crisis low in February 2016, the reading climbed consistently for more than a year as loans issued in 2006 and 2007 reached their maturity dates and were not paid off via refinancing. In the 16 months between March 2016 and June 2017, the delinquency rate moved up 13 times. However, now that the dreaded “wave of maturities” has passed, delinquency levels have receded as well.
The October 2017 rate is just 23 basis points higher than the year-ago level, and 2 basis points lower year-to-date. This is the first time in 2017 that the year-to-date number has been lower than the final 2016 rate. 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.
About $660 million in loans became newly delinquent in October, which put 16 basis points of upward pressure on the delinquency rate. However, that was offset by a nearly identical volume of loans that were cured last month. About $750 million in previously delinquent CMBS loans were resolved with a loss or at par in October. This shaved 18 basis points off of the October reading.
Breaking it down by property type, the industrial delinquency rate fell 31 basis points to 6.24 percent, while multifamily dipped 2 basis points to 2.98 percent, which was the best performance out of all major property types. The office delinquency rate decreased by 18 basis points to 6.92 percent, and retail slid 8 basis points to 6.47 percent. Hotel loans posted the largest drop, falling 42 basis points to 3.42 percent.
