The commercial mortgage-backed securities (CMBS) delinquency rate continued to drop in December, marking the seventh consecutive month of improvement, according to the December 2013 U.S. CMBS Delinquency Report from Trepp LLC – a provider of information, analytics and technology to the CMBS, commercial real estate, and banking markets.
Trepp reports that with a rate decrease of 23 basis points over the course of the month, the delinquency rate for U.S. commercial real estate loans in CMBS is now 7.43%. The rate is 228 basis points better than the 2012 year-end delinquency rate.
"Investors had a lot to worry about in 2013," says Manus Clancy, senior managing director at Trepp. "Concerns included rising interest rates, the tapering of QE3, Cyprus, Syria, government shutdowns and the debt ceiling. Despite all the potential speed bumps, CMBS new issuance was terrific, CMBS delinquency rates continued to plunge and commercial real estate values remained firm. The results should give investors a lot of confidence going into 2014."
According to Trepp, contributing to the improvement in delinquencies in December was about $1.3 billion in previously delinquent loans that were resolved with losses. Loans that cured totaled about $1.6 billion, which put downward pressure on the rate, but $1.6 billion in new delinquencies negated that improvement, says the company.
The majority of the $3 billion of distressed assets and additional note sales by special servicer CWCapital did not resolve in time for the December payment cycle; as a result, Trepp says we should see significant decreases in the rate early this year.
For additional details, request Trepp's December 2013 U.S. CMBS Delinquency Report here.