Real Estate - MAY 5, 2017

CMBS delinquency rate rises 15 bps in April

by Jody Barhanovich

The U.S. CMBS delinquency rate pushed higher again in April, climbing to 5.52 percent, an increase of 15 basis points from March, according to Trepp.

The rate is now 129 basis points higher than the year-ago level, which was at 4.23 percent, and 29 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.

The delinquency rate has consistently climbed over the past year as loans from 2006 and 2007 have reached their maturity dates and have not been paid off via refinancing. The rate has increased in 12 of the past 14 months.

Delinquency rates for four of the five major property types increased in April. The industrial delinquency rate moved up 12 basis points to 7.15 percent, while the office delinquency rate jumped 59 basis points to 7.97 percent. The retail delinquency rate increased 18 basis points to 6.3 percent as well, while lodging dropped 48 basis points to 3.22 percent. The multifamily delinquency rate improved 6 basis points to 2.66 percent and remains the best performing major property type.

Almost $2.5 billion in loans became newly delinquent in April. This put 58 basis points of upward pressure on the delinquency rate. Almost $800 million in loans were cured last month, which helped push delinquencies lower by 19 basis points. In addition, approximately $864 million in previously delinquent CMBS loans were resolved with a loss or at par in April and removing those previously distressed assets moved the rate down by 20 basis points.

“Don't be surprised if the delinquency rate continues to rise,” says Trepp.

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