NEW YORK — The delinquency rate for U.S. commercial real estate loans in commercial mortgage-backed securities (CMBS) dropped to 8.48 percent in July, down slightly from 8.65 percent in June and a 123-basis-point improvement since the start of 2013, according to New York-based Trepp LLC. In fact, the July level is the lowest delinquency rate since September 2010.
One year ago, the Trepp CMBS delinquency rate reached an all-time high of 10.34 percent. July’s rate decrease was the third time in the last four months that the Trepp CMBS delinquency rate fell. Only a four-basis-point increase in May interrupted the recent improvement in the delinquency rate.
This fairly consistent improvement can be largely attributed to high levels of CMBS loan resolutions, reports Trepp. July had $2.05 billion in loans resolved — up significantly from $1.25 billion in June and $858 million in May. Also contributing to fewer delinquencies were $1.08 billion of loans that were cured during the month of July. However, July saw $2.39 billion in newly delinquent loans, which measured almost twice the total posted in June.
Among the major property types, office and multifamily loans saw big improvements, each with over 40-basis-point declines in delinquencies. The remaining property types saw negligible movements in their rate. Retail is the best performing major property type, while industrial is the worst.
“After a rough month for CMBS market in June — with rising interest rates and widening spreads — everyone was on tenterhooks about future issuance,” says Manus Clancy, senior managing director at Trepp. “July saw the return of stability, and the forward looking calendar for new deals is full. This should bode well for continued improvement in the delinquency rate going forward.”
— Matt Valley