NEW YORK CITY—The delinquency rate for CMBS fell to 4.89% in December, its lowest reading in 15 months, Trepp LLC said Wednesday. The 29-basis point drop was the largest in about two years, and also represented the sixth consecutive monthly decline in late-pays for CMBS.
In the 16 months between March '16 and this past June, the CMBS delinquency rate moved up 13 times. “However, the delinquency level has receded since June as bubble-year loans have passed their maturity date and been resolved,” according to Manus Clancy, senior managing director with Trepp. “Put another, simpler way: fewer loans are defaulting, and those that defaulted in recent years are being resolved away (often with losses).” Further declines in delinquencies could be in the cards this year, he adds.
December saw more than $800 million of CMBS loans became newly delinquent; conversely, $835 million in loans were cured last month, thereby exerting about the same level of downward pressure on the delinquency rate—20 bps—as the rate of upward pressure caused by the new delinquencies. About $1.16 billion in previously delinquent CMBS loans were resolved with a loss or at par in December, according to Trepp.
By sector, retail CMBS saw the biggest monthly improvement, while hotel loans fared the worst. Retail delinquencies dropped 66 bps in December to 6.13%, and are now 24 bps lower than the year-ago period. Although hotel securitizations continue to have the second lowest delinquency rate of the major property types, the sector was also the only one to see a monthly increase, rising 19 bps to 3.82% and up 25 bps year over year.
Industrial delinquencies fell 43 bps to 5.67%. Year-over-year, the industrial reading was up five bps. Office's Y-O-Y improvement of 73 bps was the best of any property type, although its monthly improvement was comparatively modest: 10 bps to 6.4%.
Apartment delinquencies dropped 35 bps from November to 2.36% last month, and improved by 36 bps from a year ago. Trepp notes that securitized multifamily loans remain the best performing major property type.
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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.
