NEW YORK, NY – Trepp, a leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets, released its December 2016 US CMBS Delinquency Report.
The Trepp CMBS Delinquency Rate ascended sharply in December, as the reading reached its highest level in 14 months. The delinquency rate for US commercial real estate loans in CMBS is now 5.23%, an increase of 20 basis points from November. The rate fell 102 basis points over the first two months of the year and hit a multi-year low of 4.15% in February. However, those gains have been erased thanks to loans from the 2006 and 2007 vintages that have reached their maturity dates and have not been paid off via refinancing.
“The CMBS market opens 2017 in uncharted waters,” said Manus Clancy, Senior Managing Director at Trepp. “Issuers are now required to adhere to risk retention compliance, and higher lending spreads and interest rates could be in the offing for borrowers. All of this comes at a time when loans securitized in 2007 are coming due in droves.”
About $150 million in CMBS loans were cured last month, while only $422 million in previously delinquent loans paid off at par or with a loss. These totals are much smaller than the average levels for the past 12 months. Conversely, a hefty $1.7 billion in CMBS loans became newly delinquent in December.
The office delinquency rate underwent the largest month-over-month increase in December, as well as the largest year-over-year increase among all major property types. The office reading jumped 56 basis points to 7.13% last month, and climbed 134 basis points from last December. Though the lodging delinquency rate shed six basis points in December to 3.57%, that sector’s reading posted the second-largest year-over-year increase in 2016. Apartment loans remain the best performing property type, as the multifamily delinquency rate dropped 556 basis points year-over-year.
The report can be found at Trepp.com