July delinquency rate jumps due to maturity defaults: Trepp

The CMBS Delinquency Rate moved 16 basis points higher to 4.76 percent in July, marking the fifth straight month of increases, according to Trepp’s monthly report.

The CMBS Delinquency Rate moved 16 basis points higher to 4.76 percent in July, marking the fifth straight month of increases, according to Trepp’s monthly report.

The rate had increased 12 bps in May, 1 bps in April, 7 bps in March and 25 bps in June. The research firm said the delinquency rate “moved higher again thanks to another uptick in maturity defaults.”

“While we still believe the final body count for the [wall of maturities] will be on the low end of the original dire expectations, the ride certainly won’t be bump-free,” Trepp analysts wrote. “The July delinquency report highlights one of those bumps.”

Nearly $1.8 billion in loans became newly delinquent in July, which put 37 bps of upward pressure on the rate.

As with the previous month, the percentage of loans that were classified as ‘non-performing loans that were past their balloon date’ were also notable, the number rising 11 bps in July after a 14 bps jump in June.  

“Also putting upward pressure on the number was a falling denominator: about $3 billion in loans were paid off, forcing the remaining delinquent loans to have an increased weight,” according to Trepp.

But previously delinquent loans paid off with a loss or at par totaled about $950 million, helping to move the rate down by 20 bps, and $200 million in loans were cured, pushing the rate down another 4 bps.

The overall rate is still 66 bps lower than the year-ago level and 41 bps lower since the beginning of the year, but it is now 61 bps above its multi-year low of 4.15 percent reached in February 2016. The all-time high was 10.34 percent in July 2012.

The office delinquency rate increased 47 bps to 6.23 percent; retail was up 4 bps to 5.76 percent; industrial fell 32 bps to 5.63 percent; lodging decreased 15 bps to 3.12 percent; and multifamily remained the best performer but jumped up 16 bps to 2.51 percent.

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