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 March 2020 US CMBS Delinquency Report.
The Trepp CMBS Delinquency Rate inched up in March, a rare break from the downward trend that has extended for almost three years. The March reading was 2.07%, an uptick of three basis points from February. At least for now, heavy new issuance from late last year added performing supply to the denominator and some of the defaulted legacy loans continued to get resolved away in February.
The downward pressure of both variables on the delinquency rate should be reduced in the coming months with new issuance having stalled, distressed property sales being postponed, and COVID-19 related delinquencies starting to represent a new inflection point. Time will tell if the February level of 2.04% represents a post-crisis low for a long time to come.
“For those looking for a large COVID-19 induced uptick in March, that was always unlikely,” said Trepp Senior Managing Director, Manus Clancy. “With most loans having payments due on the first of the month, most borrowers for performing loans would likely have made their March payment – this was before the industry gained more clarity on the magnitude of the outbreak's disruption to businesses.”
The largest rate drop among major property sectors in March belonged to the multifamily sector, with its delinquency reading dropping 16 basis points to 1.63%. The overall CMBS 2.0+ delinquency rate ticked up two basis points in March to 0.91%, up 26 basis points year over year. The retail delinquency rate climbed 27 basis points to 3.89%. Retail remains the worst-performing major property type.
For additional details, such as historical comparisons and analysis on all major property types, download the March 2020 US CMBS Delinquency.