For the first time since the credit crisis began in 2008, the delinquency rate on commercial mortgage-backed securities (CMBS) has fallen for two consecutive months, according to new data from Trepp LLC. However, Trepp also determined that the rate reduction was driven primarily by a sharp spike in loans being resolved with losses, rather than delinquent loans actually curing.
Overall, the delinquency rate for U.S. commercial real estate loans in CMBS dropped 23 basis points (bps) to 9.37%, which is the lowest the rate has been since February. This drop follows a 5-bp point dip in May and was driven by the approximately $1.8 billion worth of loans liquidated in June.
‘The elimination of these troubled loans from the pool reduced the delinquency rate by about 28 bps,’ says Trepp. ‘The remaining loans in the index actually saw delinquencies rise about 5 bps, leading to a net reduction of 23 bps overall.’
Trepp also reports that the percentage of loans that were seriously delinquent (60+ days delinquent, in foreclosure, real estate owned or nonperforming balloons) is now 8.75%. Among property types, office space was the only sector to see a rate increase – up 12 bps to 7.35%. Delinquency rates were down in lodging (150 bps to 13.87%), industrial (down 28 bps to 11.68%), multifamily (down 23 bps to 16.48%) and retail (down 12 bps to 7.82%).
