The delinquency rate for commercial real estate loans in commercial mortgage-backed securities (CMBS) set an all-time high in May, jumping 24 basis points (bps) to 10.04%, according to new data from Trepp LLC, which adds the rate broke through the 10% threshold for the first time ever.
Trepp attributes the increase to big losses in hotel and industrial loans. Overall, four of the five largest property types saw delinquencies rise, with only the apartment sector improving – albeit by a single basis point.
Over $1.5 billion in loss resolutions were seen in May, Trepp adds, noting the removal of these loans from the delinquent-loan category attributed approximately 26 bps of downward pressure on the delinquency rate. In addition, loans that were cured put 41 bps of downward pressure on the rate.
However, Trepp insists there is good news in this CMBS data: The market is heavily front-loaded with five-year loans originated in 2007, which means the number of these loans reaching their maturity date will start to dwindle beginning next month.