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Research - OCTOBER 9, 2018

CMBS delinquency rate drops 23 bps in September

by Jody Barhanovich

The Trepp CMBS Delinquency Rate dropped markedly once again in September, according to Trepp. The rate has now fallen in six straight months and 14 of the last 15 periods. The overall delinquency rate for U.S. commercial real estate loans in CMBS is now 3.41 percent, a decrease of 23 basis points from the August level. The September 2018 rate is 199 basis points lower than the year-ago level. Year-to-date, the rate has fallen 148 basis points. September’s reading breaks the previous post-crisis low of 3.64 percent set last month. The all-time high of 10.34 percent was registered in July 2012.

While the reading has consistently slid lower for more than a year, the speed of the improvement accelerated in September. In fact, September’s drop was the biggest in four months and the third-largest this year. Persistent resolutions of distressed legacy debt and the sustained pace of new loan securitizations continue to drive the rate downward.

Breaking it down by property types, the industrial delinquency rate plunged 108 basis points to 2.98 percent last month. This sector’s reading was helped lower by the resolution of a large, distressed portfolio loan. The lodging delinquency reading inched up 5 basis points to 2.27 percent and the multifamily delinquency rate dropped 12 basis points to 1.95 percent. Multifamily is still the best-performing major property type. The office delinquency rate declined 18 basis points to 3.94 percent, and the retail delinquency reading sank 46 basis points to 5.01 percent. Retail remains the worst-performing major property type.

 

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