CRE Midwest

U.S. CMBS delinquency rate reaches another record high in February

TREPP

The delinquency rate for CMBS loan payments rose to an all-time high in February, but the shrinking month-to-month increase has officials at Trepp, LLC, a provider of CMBS and commercial mortgage information, optimistic that the peak may be near.

The delinquency rate for CMBS loan payments rose to an all-time high in February, but the shrinking month-to-month increase has officials at Trepp, LLC, a provider of CMBS and commercial mortgage information, optimistic that the peak may be near.

The firm’s most recent newsletter reports that with the percentage of loans 30+ days delinquent, in foreclosure, or, REO, climbed 5 basis points to 9.39 percent, the highest in history for U.S. commercial real estate loans in CMBS. The value of delinquent loans now exceeds $61.8 billion.

Yet while the number is still increasing, it is one of the smallest month-to-month increases since the credit crisis began more than two years ago. The only month that fared better was October of 2010, when the Extended Stay Hotel loan was liquidated at a loss.

Representatives at Trepp believe that the February numbers signal an end to increasing delinquencies may be near.

“The faith that investors have shown in the legacy U.S. CMBS market over the last few months was validated in February as the overall delinquency rate had one of its smallest increases in nearly two years,” said Manus Clancy, managing director of Trepp, LLC, in the newsletter.  “While we expect the delinquency rate to continue to climb slightly higher, this may be the first real sign that the peak is near.”

According to the report, the industrial, office and retail sectors boosted the overall delinquency rate in February by 32, 22 and 9 basis points respectively.  The multifamily sector improved by 24 basis points and the lodging sector improved by 47 basis points.  These remained the two worst performing sectors however with delinquency rates of 16.6 percent and 14.61 percent respectively.

Numbers:

  • Overall U.S. delinquency rate edges up to 9.39%, an increase of 5 basis points
  • Percentage of loans 30+ days delinquent or in foreclosure: February: 9.39% | January: 9.34% | December: 9.20%
  • If defeased loans were taken out of the equation, the overall delinquency rate would be 9.90%, up 4 basis points from January 2011
  • Percentage of loans seriously delinquent (60+ days delinquent, in foreclosure, REO or non-performing balloons) is at 8.75% - up 16 basis points from January 2011