CMBS Delinquency Rate Slides Below 4% for First Time in Almost Nine Years According to Trepp Report

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 June 2018 US CMBS Delinquency Report.

The Trepp CMBS Delinquency Rate fell again in June, marking the eleventh time it has dropped in the last 12 months. The overall delinquency rate for US commercial real estate loans in CMBS shed 17 basis points to 3.95% in June. After reaching its lowest post-crisis level in May, the delinquency reading hit a new milestone by dropping below 4% for the first time since July 2009.

“For the second straight month, the delinquency rate hit a post-crisis low – a result of solid new CMBS issuance and a healthy pace of troubled assets meeting their resolution,” said Trepp Senior Managing Director, Manus Clancy. “In February, we predicted that the delinquency rate would hit a post-crisis low before the 4th of July. We now believe that a sub-3% rate is achievable before the ball drops to ring in the New Year.”

The CMBS 2.0+ delinquency rate moved one basis point higher to 0.49% in June. The rate of 2.0+ debt now seriously delinquent clocked in at 0.41%, which is up two basis points from May. Similar to CMBS 2.0+, the CMBS 1.0 delinquency reading increased marginally in June as it rose two basis points to 47.19%. The rate of seriously delinquent CMBS 1.0 debt fell four basis points month over month to 47.09%. 

June’s largest month-over-month rate drop among major property types was observed in the lodging sector as it rate shed 60 basis points to 2.32%. Although the multifamily sector still boasts the lowest delinquency rate of the major property sectors, the lodging reading is not far behind. The office rate fell 36 basis points to 4.66% last month. Retail delinquencies increased six basis points to 5.78% in June.

The full report can be found here.