Trepp, LLC released its December 2013 US CMBS Delinquency Report.
The Trepp CMBS delinquency rate continued to drop in December, which marked the seventh consecutive month of improvement. With a rate decrease of 23 basis points over the course of the month, the delinquency rate for US commercial real estate loans in CMBS is now 7.43 percent. The rate is 228 basis points better than the 2012 year-end delinquency rate.
“Investors had a lot to worry about in 2013,” said Manus Clancy, Senior Managing Director at Trepp. “Concerns included rising interest rates, the tapering of QE3, Cyprus, Syria, government shutdowns, and the debt ceiling. Despite all the potential speed bumps, CMBS new issuance was terrific, CMBS delinquency rates continued to plunge, and commercial real estate values remained firm. The results should give investors a lot of confidence going into 2014.”
Contributing to the improvement in delinquencies in December was about $1.3 billion in previously delinquent loans that were resolved with losses. Loans that cured totaled about $1.6 billion, which put downward pressure on the rate, but $1.6 billion in new delinquencies negated that improvement.
The majority of the $3 billion of distressed assets and additional note sales by special servicer CW Capital did not resolve in time for the December payment cycle. As a result, we should see significant decreases in the rate in early 2014.