CMBS Delinquency Rates Set New Post-Crisis Low with Latest Drop According to Trepp Report

NEW YORK, NY - Trepp, a leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, has released its April 2019 US CMBS Delinquency Report. 

The Trepp CMBS Delinquency Rate fell six basis points to 2.82% in April. That level is now the lowest delinquency reading observed since the 2008 financial crisis. April’s rate cancels out the marginal increase in delinquencies from March when the reading inched one basis point higher to 2.88%. The delinquency rate has decreased by 154 basis points year over year.

“The CMBS sector continues to chug along nicely,” said Trepp Senior Managing Director, Manus Clancy. “Spreads have squeezed tighter thanks to favorable economic conditions, and distressed legacy debt continues to be resolved at a healthy clip. Even though there are some soft spots in the market, such as retail and student housing, issuance and performance continue to be steady and largely volatility-free for now."

For the second time in the last three months, the retail delinquency rate posted the greatest improvement among major property types. The retail reading shed 28 basis points to 4.62% in April, but it remains the worst performing major property sector. Hotel delinquencies are still at the lowest level of all major property types, as the lodging rate fell five basis points to 1.55% last month. The industrial delinquency rate climbed eight basis points to 2.10%.

Delinquencies among CMBS 2.0+ loans jumped five basis points higher to 0.70% in April. The CMBS 2.0+ delinquency rate has only increased by 15 basis points year over year, but that reading has improved in just four of the last 12 months. The delinquency rate for CMBS 1.0 debt moved one basis point higher to 46.46% in April. Retail loans are also the worst performing sector in the CMBS 1.0 space, as that reading was 61.65% last month.

The full report can be accessed at Trepp.com