CMBS Delinquency Rate Jumps by Largest Rate Increase Measured in More than Five Years

NEW YORK, NY – Trepp, LLC, a leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, released its June 2017 US CMBS Delinquency Report.

The Trepp CMBS Delinquency Rate climbed by its highest amount in more than five years last month. The delinquency rate for US commercial real estate loans in CMBS is now 5.75%, an increase of 28 basis points from May. The jump in June’s reading is the highest rate increase measured since March 2012. The June 2017 rate is now 115 basis points higher than the year-ago level.

“After months of marginal increases, the ‘wall of maturities’ finally took a meaningful toll on the CMBS delinquency rate,” said Manus Clancy, Senior Managing Director at Trepp. “June’s climb is well below the rate increases regularly seen in 2010, but the reading should still be anticipated to move somewhat higher through the rest of the summer as pre-crisis loans reach their maturity dates.”

A whopping $2.4 billion in CMBS loans became newly delinquent in June, with two-thirds of that total coming from notes that hit their balloon date and were not paid off. More than $400 million in loans were cured last month, which helped push delinquencies lower by 10 basis points. About $1.3 billion in CMBS loans that were previously delinquent were resolved with a loss or at par in June, and that pushed the rate down by 31 basis points.

Delinquency readings for all five major property types increased last month. June’s largest increase belonged to the multifamily sector, as that rate shot up 110 basis points to 3.92%. As a result, the multifamily segment is no longer the best performing major property type. The office delinquency rate jumped 21 basis points last month to 7.46%. Industrial delinquencies spiked 20 basis points to 7.57%.

For additional details, such as delinquency status and historical comparisons, download the June 2017 US CMBS Delinquency Report.