NEW YORK, NY - Trepp, LLC, the leading provider of CMBS and commercial mortgage information, analytics, and technology to the global securities and investment management industry, released its October 2011 U.S. CMBS Delinquency Report.
The delinquency rate for U.S. commercial real estate loans in CMBS moved up 21 basis points in October to 9.77%. The CMBS delinquency rate is now at its second highest level ever. Only the 9.88% reading in July 2011 was higher. After experiencing a big dip in the delinquency rate in August, the rate has now increased for two straight months. The value of delinquent loans is now $60.2 billion.
"After taking a beating over the prior three months, the CMBS market finally saw some spread tightening in October," said Manus Clancy, managing director of Trepp. "This improvement may ultimately lure lenders back into the market, but it may be a while before it shows up in new CMBS issuance or reduced CMBS delinquencies."
This negative sentiment continued for the better part of October. Word of layoffs at origination and trading shops on Wall Street jolted the market further. Spreads continued to race upward--ultimately hitting their highest levels since mid-2010. With a bevy of 2007-originated five-year loans coming due in 2012, the hope that new CMBS issuance would provide a safety valve of sorts for commercial real estate borrowers seemed more and more remote.
The multifamily delinquency rate dropped 23 basis points in October but remains the worst major property type at 16.73%. The hotel delinquency rate jumped up 82 basis points to 14.12% and the office delinquency rate moved up 66 basis points to 8.95%. The industrial delinquency rate increased 21 basis points to 11.59%, while the retail delinquency rate was virtually unchanged for October--down one basis point to 7.61 percent--and is still the best performing major property type.
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Trepp, LLC is the leading provider of CMBS and commercial mortgage information, analytics, and technology to the global securities and investment management industries. Trepp provides primary and secondary market participants with the tools and insight they need to increase their operational efficiencies, information transparency and investment performance.