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Research - DECEMBER 4, 2018

CMBS delinquency rate resumes decline in November at 3.33%

by Jody Barhanovich

In November, the Trepp CMBS Delinquency Rate resumed its year-long downward trajectory in November, after its one-time uptick in October, according to Trepp.

The overall delinquency rate for U.S. commercial real estate loans in CMBS is now 3.33 percent, a decrease of nine basis points from the October level.

The November 2018 delinquency reading is 185 basis points lower than the year-ago level. Year-to-date, the rate has fallen 156 basis points. The November rate also represents a new post–financial crisis low for the reading. The delinquency rate’s peak of 10.34 percent was measured in July 2012.

The delinquency rate began to fall with consistency after June 2017 when its reading clocked in at 5.75 percent. Fortunately, the fabled Wall of Maturities entered its final stages around that time. The rate has now dropped in 15 of the 17 months from July 2017 to November 2018.

Looking back one year ago for comparison, the U.S. CMBS delinquency rate was 5.18 percent.

Breaking it down by property type, lodging has retaken the claim as best-performing major property type and is now at 1.93 percent. The industrial delinquency rate rose 19 basis points to 3 percent, while the multifamily delinquency rate climbed 16 basis points to 2.04 percent. The office delinquency rate declined 10 basis points to 3.83 percent. Lastly, the retail delinquency rate fell nine basis points to 5.30 percent and remains the worst-performing major property type.

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