The delinquency rate for U.S. commercial real estate loans in commercial mortgage-backed securities (CMBS) fell 15 basis points (bps) in February to 9.37%, according to new data from Trepp LLC.
According to Trepp, the value of delinquent loans is now $56.4 billion. The rate was pushed down further by the effects of loans curing (60 bps), new CMBS issuance and loans paying off in full (3 bps combined), while newly delinquent loans put 63 bps of upward pressure on the rate.
However, Trepp attributes some of the overall improvement in the February delinquency rate to a change in status of approximately $900 million of loans. These loans are past their balloon date but are current in interest payments, and thus no longer classify as delinquent. Had these loans factored into the overall delinquency rate, the rate would have been 10.57% – up 22 bps for the month.
‘The resolution of these performing, but past-maturity loans will likely determine whether the delinquency rate rises or falls over the next 12 months,’ says Manus Clancy, senior managing director at Trepp. ‘The rate should remain fairly stable if they are modified or refinanced, but watch out if these loans slide into foreclosure.’
Within specific property types, the multifamily delinquency rate fell 74 bps in February, but remained the worst-performing major property type at 14.65%. Industrial continued to be the second worst-performing sector in February, with its delinquency rate up 23 bps to 12.37%. The lodging delinquency rate finished the month down 104 bps at 11.05%, an improvement of 350 bps within the last 12 months, and the office delinquency rate rose to 9.04%, an increase of 14 bps. Despite a 12 bps delinquency rate increase to 8%, retail remained the best-performing property type, according to Trepp.