NEW YORK, NY - Trepp, the leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets, released its July 2016 US CMBS Delinquency Report.
The Trepp CMBS Delinquency Rate moved noticeably higher in July, as the rate was pushed up by loans that reached their maturity date but were not paid off. The delinquency rate for US commercial real estate loans in CMBS is now 4.76%. The rate has increased 16 basis points from June, but is 66 basis points lower than the year-ago level.
In July, CMBS loans that were previously delinquent but paid off with a loss or at par totaled almost $950 million. Over $200 million in loans were cured last month, and over $1.8 billion in loans became newly delinquent. However, over $3 billion in loans were paid off in July, which gave the remaining delinquent loans an increased weight.
“As we noted last month, there is a growing number of loans from the 2006 and 2007 vintages that are reaching their maturity date and are unable to be refinanced,” said Manus Clancy, Senior Managing Director at Trepp. “This is pushing the delinquency rate higher and we expect that trend to continue for the foreseeable future. The one bright spot is that with Treasury rates near historic lows and CMBS tightening sharply over the last few weeks, some of the ‘cuspier’ loans could squeeze by.”
The percentage of seriously delinquent loans, defined as 60+ days delinquent, in foreclosure, REO, or non-performing balloons, increased along with the overall delinquency rate. The rate of seriously delinquent loans inched up 16 basis points for the month, now 4.67%. If defeased loans were removed from Trepp’s delinquency calculation, the 30-day delinquency rate would be 4.97%.
By property type, delinquency rates for three of the five major sectors increased in June. The retail delinquency rate added four basis points to 5.67%. The office sector underwent the largest increase out of all major property types, as that delinquency rate moved up 47 basis points to 6.23%. Industrial loans underwent the greatest improvement, as the sector’s delinquency rate dropped 32 basis points to 5.63%.