Trepp LLC, a provider of information, analytics and technology to the commercial mortgage-backed securities (CMBS), commercial real estate and banking markets, has released its February 2013 U.S. CMBS Delinquency Report, which found that the delinquency rate for U.S. commercial real estate loans in CMBS fell 15 basis points in February to 9.42 percent, the lowest level in a year. Overall, the rate has fallen 92 basis points since hitting its all-time peak of 10.34 percent at the end of July 2012.
Loan resolutions dropped noticeably from $1.2 billion in January to just under $1 billion in February. There were $2.7 billion in newly delinquent loans reported in February, down slightly from the previous month. There are currently $51.8 billion in U.S. CMBS loans 30 or more days delinquent, excluding loans that are past their balloon date but current on interest payments. There are about 3,300 loans with the special servicer.
"Regardless of impending spending cuts, Euro uncertainty and dissension at the Fed about the effectiveness of quantitative easing, new issuance and spreads in the CMBS market chugged along in February, keeping up a near record pace," said Manus Clancy, senior managing direction of Trepp. "Refinancing volume, along with the steady flow of resolutions in the distressed loan pipeline kept the delinquency rate on its downward trend in February."
Among the major property types, hotel loans posted a whopping 169 basis point drop in delinquency rate to10.08 percent. These gains may turn out to be fleeting, however, as a close examination of the data shows that many of the largest loans that cured were loans that went from "non-performing matured balloons" to "performing matured balloons." In other major property types, multifamily remains the worst sector at 13.27 percent, and retail remains the best performing property type, with an unchanged rate at 7.79 percent.
"Forward-looking data points to lower delinquencies over the near term as special servicers continue to resolve non-performing loans and new CMBS deals are added to the index," said Clancy. "However, robust refinancing activity will act as an ongoing offset to this downward trend, as near record low borrowing rates not only impact distressed loans, but also remove performing loans from the equation."