Real Estate Marketing & Beyond
Trepp, LLC, a leading provider of information, analytics and technology to the CMBS, commercial real estate and banking markets, recently released its September 2016 US CMBS Delinquency report. The report showed the delinquency rate increased in September as the CMBS market continues to work through the wall of maturities.
However, it is a positive sign that delinquencies have only been slowly edging upwards and the figures certainly aren’t racing up. The delinquency rate for US commercial real estate loans in CMBS is currently 4.78%, an increase of 10 basis points from August. This figure is 50 basis points lower than a year ago and is 39 basis points lower than at the beginning of the year.
Last month, CMBS loans that were previously delinquent but paid off with a loss or at par totalled more than $850 million. More than $500 million in loans were cured last month, but at the same time nearly $1.3 billion in CMBS loans became newly delinquent.
Manus Clancy, Senior Managing Director at Trepp said “As the CMBS market continues to work through the wall of maturities, it’s a positive sign that delinquencies have been inching, not racing up. There was some spread widening in September which bears monitoring in the future. But with Treasury rates and spreads where they are, we are optimistic that future upticks in delinquency levels will be relatively benign.”
Seriously delinquent loans are defined as being 60 or more days delinquent, in foreclosure, REO, or non-performing balloons and this percentage increased along with the overall delinquency rate. The rate of seriously delinquent loans rose by nine basis points to 4.67%. If defeased loans were removed from Trepp’s delinquency calculation, the 30 day delinquency rate would be 4.99%.
The industrial sector was the only reading among major property types to see a decrease in the delinquency rate for each of the past four months. The industrial delinquency rate is now 5.28% having dropped 29 basis points last month. This is the largest decrease amongst major property types for September. The largest increase by property type was seen in the office sector where the reading increased by 30 basis points to 6.33%. Office loans are still the worst performing property type. To read the full press release, please click here.
