U.S. CMBS Delinquency Rate Ticked up Slightly in December, Says Trepp

by Christina Cannon

Following three straight months of improvement, the delinquency rate for loans in U.S. commercial mortgage-backed securities (CMBS) ended 2015 modestly higher, according to data analytics firm Trepp LLC. The CMBS delinquency rate for loans 30 days or more past due increased four basis points to 5.17 percent in December.

Still, the delinquency rate was 58 basis points lower than the 2014 year-end level of 5.75 percent.

The percentage of loans seriously delinquent (60 or more days past due, in foreclosure, REO, or non-performing balloons) in December was 5 percent, two basis points lower than the prior month.

More than $1.6 billion in loans became newly delinquent in December, which put 32 basis points of upward pressure on the delinquency rate.

About $450 million in loans were cured last month, which helped push delinquencies lower by nine basis points. CMBS loans that were previously delinquent but paid off with a loss or at par totaled almost $1.1 billion in December.

Lodging Sector Shines

Hotel CMBS loans posted a 2.82 percent delinquency rate in December, up seven basis points from the prior month but still the lowest delinquency rate among all major property types (see table). Year-over-year, the delinquency rate for the lodging sector improved 195 basis points — the best improvement of the five major property sectors.

The hotel industry is in the midst of a boom thanks to strong demand from both leisure and business travelers. Revenue per available room (RevPAR), a key industry metric, increased a healthy 6.3 percent in 2015 across the United States and the average daily rate rose 4.4 percent to $120.01. Meanwhile, supply grew by a modest 1.1 percent in 2015.

The delinquency rate for industrial CMBS loans dropped 26 basis points to 5.73 percent. Year-over-year, the industrial rate improved 182 basis points.

Among multifamily CMBS loans, the delinquency rate increased 13 basis points to 8.28 percent. Apartment loans were the worst performer among the major property types in December. However, the multifamily rate delinquency rate improved 57 basis points year over year.

The delinquency rate for office CMBS loans inched up six basis points to 5.79 percent. Year-over-year, the delinquency rate in this segment improved 29 basis points.

The delinquency rate for retail CMBS loans jumped 12 basis points to 5.76 percent. Year-over-year, the retail rate was the only one of the five major property types that didn’t improve.

— Christina Cannon

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