October 8, 2018
The CMBS delinquency rate dropped markedly once again in September, according to research by Trepp. The rate has now fallen in six straight months, and 14 of the last 15 periods.
Trepp researcher Manus Clancy notes, while the reading has consistently slid lower for more than a year, the speed of the improvement accelerated in September. In fact, September’s drop was the biggest in four months and the third-largest this year. Persistent resolutions of distressed legacy debt, and the sustained pace of new loan securitizations, continue to drive the rate downward, Clancy wrote.
The overall delinquency rate for U.S. commercial real estate loans in CMBS stood at 3.41% last month, a decrease of 23 basis points from the August level. Trepp believes the delinquency rate could crack the 3% level before the end of 2018.
The September 2018 rate was 199 basis points lower than the year-ago level. Year-to-date, the rate has fallen 148 basis points. September’s reading breaks the previous post-crisis low of 3.64% set last month. The all-time high of 10.34% was registered in July 2012.
The industrial sector posted the largest improvement among major property types last month. Thanks to a resolution of a large, distressed portfolio loan, the industrial reading tumbled 108 basis points to 2.98%.
Although the retail sector remains the worst performing major property type, the retail delinquency rate fell by the second-largest amount last month. Clancy notes, one of the reasons for the segment’s improvement was the fact that the 123-property Toys “R” Us loan behind the TRU 2016-TOYS deal became current last month.
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