CMBS Delinquency Rate ticks up, but a deluge is coming

The Trepp CMBS Delinquency Rate inched up in March, a rare break from the downward trend that has extended for almost three years. For those looking for a large COVID-19 induced uptick in March, that was always unlikely. With most loans having payments due on the first of the month, most borrowers for performing loans would likely have made their March payment — this was before the industry gained more clarity on the magnitude of the outbreak’s disruption to businesses.

The March reading was 2.07percent, an uptick of three basis points from February. At least for now, heavy new issuance from late last year added performing supply to the denominator and some of the defaulted legacy loans continued to get resolved away in February. The downward pressure of both variables on the delinquency rate should be reduced in the coming months, with new issuance having stalled, distressed property sales being postponed, and COVID-19-related delinquencies starting to represent a new in