U.S. CMBS Delinquency Rates Continue Down Good Path

The commercial mortgage-backed securities (CMBS) delinquency rate fell for the 10th consecutive month in March, in part due to CWCapital's ongoing distressed asset sales, according to Trepp's U.S. CMBS Deliquency Report for the month.

The rate for U.S. commercial real estate loans in CMBS fell 24 basis points in March to 6.54%. The last time the Trepp U.S. CMBS delinquency rate was below this level was over four years ago, in January 2010, the company notes.

Trepp credits some of the month-over-month improvement to the ongoing CWCapital distressed asset sales. In the first three months of this year alone, the CMBS market saw 114 basis points of downward pressure on the delinquency rate due to previously delinquent loans being resolved with losses. While not all of these resolutions are a result of the CWCapital assets, Trepp says they have contributed significantly to the rate's improvement.

"The CMBS market had the pleasure of singing the same happy refrain in March, as delinquencies continued to fall," says Manus Clancy, senior managing director at Trepp. "We had anticipated a large drop in the rate due to the CWCapital assets, but that descent has been extended, as the notes didn't really begin to make it through remittance cycles until the New Year. We suspect the rate will stabilize somewhat in coming months."

New delinquencies totaled $1.7 billion in March, which was up from $1.3 billion in February. The total number of delinquent loans was down month over month, as there are now $34.6 billion delinquencies.

All five major property types improved in March. Retail dipped just six basis points but remains the best-performing major property type. Multifamily saw a 13 basis-point improvement but is still the worst performer among the group, with the only double-digit delinquency rate.

To download a copy of Trepp's report, click here.


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