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CMBS Delinquency Rate Hits Lowest Point in Two-Plus Years
May 01, 2013

In April, the Trepp CMBS delinquency rate posted its lowest reading in more than two years. The 47 basis point drop in the delinquency rate was the biggest one month gain since Trepp began publishing the number in the fall of 2009. All major property types saw their delinquency rates fall in April. Hotel and apartment loans led the pack, each with more than 100 basis points in improvement. The delinquency rate for US commercial real estate loans in CMBS was 9.03 percent in April, the lowest reading since the November 2010 rate of 8.92 percent. The resolution of distressed CMBS loans was a major driver that lowered the delinquency rate in April. Over $1.6 billion in loans were resolved with losses during the month. The removal of these loans from the ledger of delinquent assets created 30 basis points of downward pressure on the delinquency number. This was approximately double the volume of loan resolutions in March. Additionally, over $800 million in loans that were delinquent in March managed to payoff without a loss in April. Almost all of these notes were listed as non-performing loans that were past their maturing dates as of March. The removal of these loans from the delinquent category added 15 basis points of downward pressure to the rate. Loans that cured put an additional 35 basis points of downward pressure on the delinquency rate. Improvement in this category was spearheaded by several large loan modifications, including the $375 million Belnord loan. Its modification paved the way for the note to cure after languishing in the 90+ days delinquent bucket earlier in the year. As for the downside, that too managed to see significant improvement in April. There were $1.6 billion in newly delinquent loans in April, which put about 30 basis points of upward pressure on the delinquency rate. This was well below the average of $2.7 billion in new delinquencies in February and March. All major property types saw their rate drop last month. The reduction in the lodging rate was a result of three big MSREF Portfolio loans paying off in full. The three loans totaled over $500 million, and all three were listed as non-performing loans that were past their maturity dates as of March. The drop in the multifamily rate was driven by the curing of the aforementioned Belnord loan and the restructuring of the $194.6 million Babcock and Brown FX3 portfolio loan. The latter was written down by over $67 million, but with the assumption of the note by the new borrowers, the loan was brought current. The Numbers ► The overall US CMBS delinquency rate decreased 47 basis points to 9.03 percent. ► The percentage of loans 30+ days delinquent or in foreclosure: April '13: 9.03 percent March '13: 9.50 percent February '13: 9.42 percent ► The percentage of loans seriously delinquent (60+ days delinquent, in foreclosure, REO, or non-performing balloons) is now 8.72 percent, down 41 basis points for the month. ► If defeased loans were taken out of the equation, the overall 30 day delinquency rate would be 9.39 percent--down down 46 basis points from March. ► There are currently $49.5 billion in delinquent loans. (This number excludes loans that are past their balloon date but are current on their interest payments.) ► There are $62.2 billion in loans with the special servicer. This represents about 3,200 loans. Historical Perspective ► One year ago, the US CMBS delinquency rate was 9.80 percent. ► Six months ago, the US CMBS delinquency rate was 9.69 percent. ► One year ago, the rate of loans seriously delinquent was 9.41 percent. ► Six months ago, the rate of loans seriously delinquent was 9.16 percent. Hotel , Multifamily Delinquency Rates Plummet; All Major Property Types Show Gains ► The lodging delinquency rate fell 152 basis points to 10.30 percent ► The multifamily delinquency rate dropped 106 basis points but multifamily remains the worst major property type with a rate of 11.67 percent. ► The office delinquency rate shed 34 basis points in dipping to 10.26 percent. ► The retail delinquency rate lost 23 basis points to 7.68 percent. Retail remains the best performing major property type. ► The industrial delinquency rate dipped 18 basis points and is now 11.54 percent.
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