TREPP: U.S. CMBS DELINQUENCY RATE CONTINES TO IMPROVE

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NEW YORK CITY — The delinquency rate on U.S. CMBS loans 30 days or more past due fell 32 basis points in November to 7.66 percent, marking the sixth consecutive month of improvement across the five major property types, according to New York-based Trepp LLC.

The delinquency rate has dropped 268 basis points since reaching an all-time high of 10.34 percent in the summer of 2012.

The retail sector posted the lowest delinquency rate (6.32 percent) among the five major property types in November, while multifamily had the highest delinquency rate (11.14 percent).

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The only fly in the ointment in November was that new CMBS loan delinquencies totaled slightly more than $2 billion, up from $1.6 billion in October, which tempered the overall drop in the delinquency rate.

Trepp reports that the overall decrease in the CMBS delinquency rate in November can be attributed to a few key factors:

• Nearly $1.2 billion in previously delinquent loans were resolved with losses. By removing these delinquent loans from the pool, the rate saw 22 basis points of improvement.

• Loans that cured totaled about $2.2 billion in November, which accounted for a drop of 40 basis points in the delinquency rate.

• Loans that were previously delinquent but paid off without a loss totaled almost $245 million in November, which resulted in a decrease of five basis points in the delinquency loan percentage.

Still to come is the sale of more than $3 billion of distressed assets and additional note sales by special servicer CWCapital, according to Trepp. Preliminary bids for the assets were due in mid-November.

Removing more than $3 billion of non-performing assets from the delinquent loan category would result in a 50-basis point decrease in the rate, so a delinquency rate that falls below 7 percent is not out of the question, according to Trepp.

The volume of delinquent CMBS loans is currently $41.3 billion. This figure excludes loans that are past due their balloon payment but are current on their interest payments.

There are $49.6 billion in loans with the special servicer, representing slightly more than 2,800 loans.

— Matt Valley

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