Industrial and Office Delinquency Rates Increase in Latest Trepp CMBS Survey

Trepp LLC, a provider of commercial mortgage-backed securities (CMBS) and commercial mortgage information, analytics and technology to the global securities and investment management industry, has released its May 2011 U.S. CMBS Delinquency Report that finds the CMBS delinquency rate fell slightly in May with the percentage of loans 30-plus days delinquent, in foreclosure or real estate-owned (REO) declining five basis points to 9.6 percent. Although small, the decline is actually the biggest rate drop for U.S. commercial real estate loans in CMBS in about two years, setting aside October 2010 when the Extended Stay Hotels loan was resolved. The value of delinquent loans is now $61.5 billion. “Last month, the delinquency rate posted its biggest rate of increase since late 2010—a 23 basis point jump,” said Manus Clancy, managing director of Trepp LLC. "The increase took many CMBS pros by surprise as it came after three consecutive months of improving results. While there may be additional bumps along the way, we think the May numbers accurately reflect a leveling off in the market.” The industrial delinquency rate spiked 120 basis points in May, boosting the rate to nearly 12 percent. Six months ago, the rate was under seven percent. The office delinquency rate was up three basis points in May, yet remains the best performing major property type at 7.23 percent. Delinquencies in all other major property types declined for the month.