The delinquency rate for U.S. commercial real estate loans in commercial mortgage-backed securities (CMBS) jumped 31 basis points (bps) in March to 9.68%, according to new data from Trepp LLC. The value of delinquent loans is now $58.1 billion.
However, Trepp reports that for the second straight month, loss resolutions were relatively modest. At about $1 billion, the number was lower than what the CMBS market has been seeing in recent months. Trepp adds that the removal of these loans from the delinquent-loan category attributed about 15 bps of downward pressure on the delinquency rate, while loans that were cured in March put an additional 43 bps of downward pressure on the rate.
Newly delinquent loans – over $5 billion in total – put 91 bps of upward pressure on the rate. The office sector's delinquency rate was up 37 bps, setting a new all-time high of 9.41%. The hotel sector's delinquency rate dropped 42 bps and was the only major property type to improve.Â
‘We predicted late last year that the delinquency rate would rise largely on the impact of 2007 loans coming due, and today's report underscores that forecast,’ says Manus Clancy, senior managing director at Trepp. ‘After the rate fell nicely in January and February, we were cautiously hopeful that we'd be wrong. This month's report shows that the market has a lot of wood to cut and that a rate north of 10 percent can't be ruled out.’