After hitting a snag in March, logging no change, the US CMBS delinquency rate managed just a single basis point improvement in April.
It’s a sign that the significant rate drops of 2014 are behind the market and that further drops will rely on new issuance, according to data and research firm Trepp.
In April, $1.35bn in CMBS loans became newly delinquent (for a $29.5bn total). That figure was offset by $600m of previously delinquent loans that were paid off either at par or with a loss, and more than $700m in cured loans, allowing for the minor rate decline.
The competing forces have kept the rate fairly level, but as special servicers have slowed the pace of resolutions, the market will have to rely on new issuance as the main driver for further rate decreases, said Joe McBride, a research associate at Trepp.
The percentage of seriously delinquent loans — defined as 60+ days delinquent, in foreclosure, REO, or non-performing balloons — ended the month up three basis points at 5.44%.
By major property type, only lodging and retail loans posted improvements in April. Lodging remains the best performing property type with a rate of just 4.18%. The multifamily delinquency rate remains the worst performer with an 8.92% rate.
Still, the 5.57% delinquency rate is down 87 basis points from one year ago.
While declines of that magnitude may be unlikely this year, it’s encouraging that total CMBS issuance (including conduit, single asset/borrower, and large loan deals) ended the first quarter of 2015 at $25bn, well above the $16bn in the first quarter of 2014.