July’s US CMBS delinquency improvement wiped out

The US CMBS delinquency rate increased three basis points (bps) in August, negating July’s rate improvement, according to data and research firm Trepp.

The US CMBS delinquency rate increased three basis points (bps) in August, negating July’s rate improvement, according to data and research firm Trepp.

The rate is now 5.45% after having inched down three basis points in July to 5.42%. The rate is still down 65 bps compared to the year-ago level of 6.10% and down 30 bps year-to-date.

In August, $1.3bn in CMBS loans became newly delinquent, bringing total delinquencies to $28.4bn. But about $425m in loans were cured, and loans that were previously delinquent but paid off either at par or with a loss totaled more than $1bn.

Clancy
Clancy

“CMBS delinquencies continue to be range bound and we expect this to continue for the foreseeable future,” said Manus Clancy, senior managing director at Trepp, adding that encouraging refinancing conditions should counter unfavorable impacts from the ongoing ‘wave of maturities.’

“The fact that the CMBS market stabilized late in the month is a sign of optimism for the rest of the year,” he said.

By property type, delinquencies increased for three of the five major sectors. Multifamily loans posted the largest month-over-month rate increase, jumping 23 bps to 8.99%. Lodging improved the greatest, remaining the best-performing property type with a 26 bps decline to 3.44%.

The percentage of seriously delinquent loans, defined as 60+ days delinquent, in foreclosure, REO, or non-performing balloons, rose six basis points to 5.28%, and the 30-day delinquency rate would be 5.75% had defeased loans been removed from the calculation.

After a disconcerting June and a ‘whiff of volatility,’ when the rose five bps in June to 5.45%, the US CMBS delinquency had resumed its descent in July. May saw a 17 bps drop to 5.40%, the biggest since November 2014.

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