CMBS Delinquency Rates, Loan Prices Trend Lower

Posted on November 06, 2017 by Laura Lam

trepp cmbs October 2Trepp, LLC, a leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, released its October 2017 U.S. CMBS Delinquency Report last week.

The Trepp CMBS Delinquency Rate fell again in September, as more previously delinquent loans continue to be resolved. The delinquency rate for U.S. commercial real estate loans in CMBS is now 5.21%, a drop of 19 basis points from September. For the first time in 2017, the year-to-date level is lower than the final 2016 delinquency reading.

“For the past few months, we’ve been saying that further declines in the Delinquency Rate could be expected,” said Manus Clancy, Senior Managing Director at Trepp. “That certainly rang true in October, as more loans find refinancing or resolution ahead of their balloon dates. With the wave of maturities almost at its end, decreases in the overall reading should continue for the next few months.”

Delinquency readings for all 5 major property types fell in October, and no sector’s rate fell more than that of the hotel segment. The lodging delinquency rate dropped 42 basis points to 3.42% last month. The month’s second-largest decrease belonged to the industrial sector, as its delinquency reading shed 31 basis points to 6.24%. The office delinquency rate slid 18 basis points to 6.92% in October.

Only $660 million in CMBS loans became newly delinquent last month, the lowest monthly total in more than 3 years. Thanks to a nearly identical volume of loans which were cured in October, the upward pressure from those new delinquencies was nullified. Additionally, roughly $750 million in previously delinquent debt was resolved last month.

Source:  Trepp