For the first time since the credit crisis began in 2008, the CMBS delinquency rate has fallen for two consecutive months, reports Trepp.
After a modest reduction in May, the delinquency rate fell sharply in June. The firm credits the rate reduction to a sharp spike in loans being resolved with losses, rather than delinquent loans actually curing.
Overall, the delinquency rate for U.S. commercial real estate loans in CMBS dropped 23 basis points to 9.37 percent. This is the lowest the rate has been since February 2011. The 23 basis point drop comes on the heels of a five basis point dip in May. The drop was driven by the fact that about $1.8 billion worth of loans were liquidated in June. That was the highest total since we began measuring the loss resolution numbers 18 months ago.
The elimination of these troubled loans from the pool reduced the delinquency rate by about 28 basis points. The remaining loans in the index actually saw delinquencies rise about five basis points leading to a net reduction of 23 basis points overall.
The percentage of loans seriously delinquent (60+ days delinquent, in foreclosure, REO or non-performing balloons) is now 8.75 percent. By that measure, the rate was down 21 basis points.
The Numbers
- Overall U.S. delinquency rate falls to 9.37%, a decrease of 23 basis points
- Percentage of loans 30+ days delinquent or in foreclosure: June 11: 9.37% — May 11: 9.60% — April 11: 9.65%
- If defeased loans were taken out of the equation, the overall delinquency rate would be 9.85%, down 25 basis points from May 2011
- Percentage of loans seriously delinquent (60+ days delinquent, in foreclosure, REO or non-performing balloons) is at 8.75%, down 21 basis points from May 2011
Historical Perspective
- One year ago, the overall U.S. delinquency rate was 8.59%
- Six months ago, the overall U.S. delinquency rate was 9.20%
- One year ago, the rate of U.S. loans seriously delinquent was 7.83%
- Six months ago, the rate of U.S. loans seriously delinquent was 8.33%
Among Major Property Types, Office Sector Delinquency Rate Worsens While All Other Property Types Improve
- Office delinquency rate up 12 basis points – only major property type to see rate rise – remains best performing major property type at 7.35%
- Lodging delinquency rate plunges – rate falls 150 basis points – now 13.87%
- Industrial delinquency rate falls 28 basis points – retreats modestly after months of sharp increases – now 11.68%
- Multifamily delinquency rate falls – down 23 basis points – remains worst major property type at 16.48%
- Retail delinquency rate falls 12 basis points to 7.82%
