NEW YORK, NY - Trepp, LLC, the leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets, released its August 2014 US CMBS Delinquency Report.
For the first time in over a year, the monthly Trepp US CMBS delinquency rate moved up. After barely extending its winning streak to fourteen months with a single-basis-point drop in July, the delinquency rate increased six basis points in August. The delinquency reading for US commercial real estate loans in CMBS finished at 6.10% for the month of August, 288 basis points lower than the year-ago level.
While delinquencies have fallen 133 basis points from the start of 2014, the rate of distressed loan resolutions has continued to taper off from the pace of 2012 and 2013. Trepp believes the sizeable improvements seen in 2013 are likely a thing of the past and expects gains posted in the remainder of 2014 and 2015 to be more modest.
On the stall in improvement, Senior Managing Director Manus Clancy said, “All good things must come to an end at some point. The days of double-digit month-over-month improvements for the CMBS market may be behind us for a while.”
A number of large loans became newly delinquent this month. One retail note alone put almost five basis points of upward pressure on the rate. In addition, a large industrial loan that became 30 days late contributed to a 50 basis point increase in the industrial delinquency rate. With the exception of the multifamily delinquency rate, all readings by major property type worsened in August.
“While we have reported on more auctions of distressed assets over the past two months, liquidation volume has remained lower than average,” said Joe McBride, Research Analyst. “Combined with a recent uptick in loans entering special servicing, August’s reading may suggest a temporary bottom in the delinquency rate until new issuance picks up in the next few months, adding healthy loans to the equation.”