CMBS Delinquency Report Highlights the Eighth Consecutive Drop According to Trepp Market Data

NEW YORK, NY - Trepp, LLC, a leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, has released its February 2018 US CMBS Delinquency Report.

The Trepp CMBS Delinquency Rate dropped again in February, marking the eighth consecutive month in which the rate has improved. The delinquency reading for US commercial real estate loans in CMBS fell 32 basis points to 4.51% last month. The delinquency rate has decreased by 124 basis points in the eight months since June 2017, and is now just 36 basis points higher than the post-crisis low observed in February 2016.

“As we predicted over the summer, the delinquency rate has receded nicely over the last eight months,” said Trepp Senior Managing Director, Manus Clancy. “This is a function of CRE lenders and borrowers having resolved loans from the Wall of Maturities at a faster clip than anyone would have expected five years ago. While higher interest rates and volatility could make the path a little bumpy at times, we believe more drops in the delinquency rate are coming.” 

Just less than $600 million in CMBS loans became delinquent in February, which put 13 basis points of pressure on the reading. More than $800 million in debt was cured last month, while the volume of previously delinquent CMBS debt that was resolved with a loss or at par clocked in at $700 million. Those resolutions reduced the February delinquency rate by 20 and 17 basis points, respectively.

Delinquency rates for all but one of the five major property types fell last month, the largest of which came from the lodging sector. Hotel delinquencies sunk 128 basis points to 3.23% in February. The office delinquency reading dipped 38 basis points to 5.46% last month. The only rate increase was observed in the multifamily sector, as that reading climbed 32 basis points to 2.40%. Even with the higher delinquency reading, the apartment segment is still the best performing major property type.

For additional details, such as historical comparisons and analysis, download the US CMBS Delinquency Report.