The delinquency rate for U.S. commercial real estate loans in commercial mortgage-backed securities (CMBS) jumped 31 basis points (bps) in March to 9.68%, according to new data from Trepp LLC. The value of delinquent loans is now $58.1 billion.
However, Trepp reports that for the second straight month, loss resolutions were relatively modest. At about $1 billion, the number was lower than what the CMBS market has been seeing in recent months. Trepp adds that the removal of these loans from the delinquent-loan category attributed about 15 bps of downward pressure on the delinquency rate, while loans that were cured in March put an additional 43 bps of downward pressure on the rate.
Newly delinquent loans – over $5 billion in total – put 91 bps of upward pressure on the rate. The office sector's delinquency rate was up 37 bps, setting a new all-time high of 9.41%. The hotel sector's delinquency rate dropped 42 bps and was the only major property type to improve.Â
‘We predicted late last year that the delinquency rate would rise largely on the impact of 2007 loans coming due, and today's report underscores that forecast,’ says Manus Clancy, senior managing director at Trepp. ‘After the rate fell nicely in January and February, we were cautiously hopeful that we'd be wrong. This month's report shows that the market has a lot of wood to cut and that a rate north of 10 percent can't be ruled out.’Register here to receive our Latest Headlines email newsletter
The U.S. commercial mortgage-backed securities (CMBS) delinquency rate rose again in March, with the percentage of loans 30+ days delinquent, in foreclosure or real estate owned climbing 3 basis points (bps) to 9.42% – the highest in history for U.S. commercial real estate loans in CMBS, according to new data from Trepp LLC. This month-over-month increase, however, is even smaller than February's increase and is one of the smallest increases since the beginning of the credit crisis over two years ago.Â
Trepp reports that the value of delinquent loans now exceeds $61.5 billion. The lodging and office sectors boosted the overall delinquency rate in March by increasing 136 bps and 3 bps, respectively. The multifamily sector improved by 40 bps, yet remained the worst-performing property type, while the retail and industrial sectors also improved by 9 bps and 19 bps, respectively.Â
‘For the second straight month, we've seen the delinquency rate increase in the low single digits. These are some of the best readings we've seen since the credit crisis began,’ says Manus Clancy, managing director at Trepp. ‘We believe that the overall delinquency rate will continue to rise over the next six months, but at a pace similar to what we've seen recently, not the 40 bps that we saw in 2009 and early 2010. You cannot discount entirely, however, the possibility that we see the rate decline slightly in one of these months.’
SOURCE: Trepp LLCRegister here to receive our Latest Headlines email newsletter