Commercial Mortgage Delinquencies Inch Up In May

After posting its lowest reading in more than two years in April, the delinquency rate on commercial mortgages in the U.S. inched up in May, according to Trepp.

The delinquency rate for U.S. commercial real estate loans in commercial mortgage-backed securities (CMBS) was 9.07% at the end of May – an increase of four basis points from April's 9.03%, the firm reports.

In April, the delinquency rate plummeted 47 basis points, the biggest single-month drop since Trepp began tracking the data in the fall of 2009.

The delinquency rate for March was 9.5%.

The resolution of distressed CMBS loans was a major factor in driving the delinquency rate lower in recent months, Trepp reports. However, loan resolutions dropped sharply in May, with only $858 million in loans resolved – roughly 46% less than the amount resolved in April.

The percentage of loans seriously delinquent (60+ days delinquent, in foreclosure or REO, or non-performing balloons) is now 8.67%, down five basis points for the month, Trepp reports. With defeased loans removed from the equation, the overall 30-day delinquency rate for May is 9.4% – up one basis point from April.

Excluding loans that are past their balloon date but current on their interest payments, there is currently $49.75 billion in delinquent loans in the U.S.

One year ago, the U.S. CMBS delinquency rate was 10.04%, with 9.51% seriously delinquent. Six months ago it was 9.71%, with 9.24% seriously delinquent.

Perhaps not surprisingly, given the shrinking manufacturing base in the U.S., delinquencies on industrial properties in May climbed 91 basis points and is now 12.45%, making it the worst major property type.


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