NEW YORK CITY—Due largely to a 2006 loan backed by 2.4 million square feet of retail space, CMBS delinquencies ticked upward again for the first time in more than a year. Trepp said Thursday that late-pays on CMBS rose five basis points in August to 6.1%, ending a 14-month streak of monthly improvements.
The upward tilt of CMBS delinquencies occurred after July barely registered an improvement over June, with the late-pay rate declining just one bp from June's 6.05%. Even so, Trepp noted that August's rate is 228 bps lower than a year ago. Year-to-date, delinquencies have fallen 133 bps from 7.43% as of Dec. 31, 2013.
Given a tapering-off from the “breakneck pace” of loan resolutions seen in 2012 and 2013, Trepp says big improvements in the delinquency rate seen over the past two years are likely a thing of the past. The CMBS analytics firm expects any additional gains in 2014 and 2015 to be “much more modest.”
Conversely, Trepp predicts that the rate of performing loans that become defeased or are prepaid should remain elevated. August brought a large spike in defeasances. “As investors expect the Federal Reserve to raise interest rates in the next year, the race is on for borrowers to lock in low interest rates,” according to Trepp's monthly report.
The largest newly delinquent loan was the Westfield Centro Portfolio at $240 million, which makes up 7.8% of the collateral behind JPMCC 2006-LDP7. The five-property note, backed by 2.4 million square feet of retail space in California, Colorado, Connecticut, Missouri and Ohio, became delinquent for the first time in August after going into special servicing in May. This note alone put almost five bps of upward pressure on the delinquency rate.
Biggest gainer, or loser as the case may be, among property sectors was industrial, which saw its delinquency rate shoot up 50 bps to 8.39%. Lodging added 18 bps to reach 5.37%; the hotel sector remains the best performing, according to Trepp data.
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
