Research - NOVEMBER 6, 2014

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CMBS delinquency rate sees biggest rise in two years

by Reg Clodfelter

The CMBS delinquency rate rose 11 basis points in October to 6.14 percent, the largest increase since it rose 18 basis points in July 2012, according to Trepp. Since that uptick, the rate has fallen in 21 of the past 27 months and has been trending significantly downward. There are currently $31.8 billion in delinquent loans backing CMBS.

Despite the growth in the delinquency rate — the second time the delinquency rate has risen in the past three months — it has dropped significantly from the 7.98 percent seen just a year ago. Still, having an increase in delinquencies in two of three months could be a sign that the rate is leveling off before its likely rise in the coming years as a number of loans issued between 2005 to 2007, a time when many loans in CMBS issuances were made with particularly poor fundamentals, will be coming due.

By property type, only the delinquency rate for loans on offices improved, dropping 8 basis points to 6.48 percent.

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