NEW YORK, NY - Trepp, LLC, the leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets, released its July 2014 US CMBS Delinquency Report.
Having achieved double-digit improvements in the monthly US CMBS delinquency rate for over a year, the contraction in the rate slowed significantly in July. During the course of the month, the delinquency rate for US commercial real estate loans in CMBS dropped just one basis point, to 6.04%.
Loan resolutions, which have ranged from $900 million to $2 billion (excluding the CWCapital sales) this year, totaled only $600 million in July. With fewer distressed loans removed from the delinquent loan pool, newly delinquent loans pushed the monthly total back up. Trepp currently counts $32.1 billion in CMBS loan delinquent, which is down from June's total.
"After so many months of steady declines in the delinquency rate, the slowdown in distressed loan liquidations and an uptick in newly delinquent loans put the brakes on the improvement in July," said Joe McBride, research analyst at Trepp. "Whether the monthly decrease in loan liquidations is an outlier or a true shift to slower workout activity from special servicers remains to be seen but we expect the rate to continue downward."
"Seriously delinquent" loans, which are counted as those 60+ days delinquent, in foreclosure, REO, or non-performing balloons, have also been on a steady decline. Again, this improvement stalled in July, as the rate decreased by only four basis points on this basis.
When broken out by major property type, lodging loans surpassed retail as the best performer. The delinquency rate for lodging loans fell to 5.19% in July and retail increased to 5.53%. While all five property types have fallen into the single digits for their respective delinquency rates, multifamily loans remain the worst performing property type, with a rate of 9.24%.