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Amid Uncertainty, Delinquency Rate Improves for CMBS in June

Jun 30, 2014

Trepp, LLC has released its June 2014 U.S. CMBS Delinquency Report, finding that halfway through 2014, commercial mortgage-backed securities (CMBS) issuance has disappointed and uncertainty persists in the fixed income and equity markets. But one thing that has remained constant is the improving delinquency rate in CMBS. June marks the 13th straight month of improvement in the delinquency rate for US commercial real estate loans in CMBS. Dropping 22 basis points to 6.05 percent in June, the reading is 260 basis points lower year over year and 429 basis points below the all-time high from 2012. “A few days ago, we saw the six-year anniversary of the beginning of the CMBS Ice Age – a stretch where there would be no CMBS issuance for 21 months,” said Manus Clancy, senior managing director at Trepp. “As we reach the halfway point of 2014, the thaw is nearly complete. New issue spreads continue to fall and legacy defaulted CMBS loans continue to be resolved at a steady pace.” Industrial loans saw the most improvement in June, dropping 55 basis points, after being the only property type to worsen in May. Retail still holds the crown of lowest delinquency of the five major property types while multifamily remains highest.  Loan resolutions tallied $900 million in June and loans that cured offset new delinquencies. There are currently $32.4 billion in delinquent loans, which is down from $33.6 billion last month. There are $40.9 billion in loans with the special servicer representing over 2,400 loans.
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