The U.S. commercial mortgage-backed securities (CMBS) delinquency rate has broken the 8% threshold, according to Trepp LLC's recently released October U.S. CMBS Delinquency Report.
Trepp reports this is the first time since early 2010 that the Trepp CMBS delinquency rate has fallen below the 8% level – a decrease marking the fifth consecutive month of rate improvement, according to the data. Last month, Trepp's data showed an MBS delinquency rate of 8.14%.
The rate dropped 16 basis points over the course of October, bringing the 30+ day delinquency rate for U.S. commercial real estate loans in CMBS to 7.98%; the percentage of loans seriously delinquent is now 7.69%, says Trepp.
"The government may have shut down this month, but special servicers took no time off," says Joe McBride, a research analyst at Trepp. "Almost $1 billion in CMBS loans were disposed with losses in October, as servicers continue to work through troubled loans, especially in the retail sector. Much of the improvement in the retail delinquency rate comes from this "cleaning out' of the distressed pipeline."
Trepp expects to see more improvement in the rate before year-end. CWCapital's impending sale of more than $2.5 billion of distressed assets could result in a 50-basis-point decrease, assuming the sales close prior to the December remittance cycle, according to Trepp.
"In addition to the distressed assets that were recently identified for sale, a large number of note sales are also expected from the servicer," adds Manus Clancy, senior managing director of Trepp. "As CW stated that it is looking to sell these before year-end, this could result in the removal of a number of loans from the delinquent category over the next 60 days."
For additional details on Trepp's data, request the October 2013 U.S. CMBS Delinquency Report here.