Five Quarters of Increases Come to an End in Largest One-Month Drop Since November 2011
In a much-anticipated event, the rising wave of delinquencies among U.S. CMBS loans finally broke as the delinquency rate for U.S.
commercial real estate loans in CMBS receded 21 basis points to 10.13% in August, according to Trepp LLC.
Share this story with your followers
This decrease occurred after five consecutive months in which the rate increased, including three months that set all-time records. This was the largest one-month drop since November 2011.
"Over the last few months, we predicted that the Trepp CMBS delinquency rate would hit a high point in the early to mid-summer and then decelerate in the second half of the year," Trepp reported. "That prognostication came to fruition this month when the delinquency rate fell sharply."
The improvement in the rate was primarily driven by two factors. First, loan resolutions remained elevated. Almost $1.5 billion in loans were resolved in August with losses. The removal of these loans from the delinquent loan category accounted for about 26 basis points of downward pressure on the delinquency rate.
The other factor that contributed was that most of the 2007 securitized loans have now passed their maturity date. The upward pressure that these loans were putting on the delinquency rate when they could not be refinanced upon maturity is now largely gone.
Among the major property types, the apartment, lodging and office segments all improved.
The laggards were industrial and retail loans, with their rates drifting higher in August.
The Numbers:
The overall U.S. CMBS delinquency rate fell to 10.13%--down 21 basis points in August.
The percentage of loans 30+days delinquent or in foreclosure: August '12: 10.13% July '12: 10.34% June '12: 10.16%.
The percentage of loans seriously delinquent (60+ days delinquent, in foreclosure, REO or non-performing balloons) is now 9.57%, down 23 basis points for the month.
There are currently $57.8 billion delinquent loans. This number excludes loans that are past their balloon date but are current in their interest payments.
Keep up weekly on national news, trends and property leads with the Watch List Newsletter, a weekly pdf that includes other news and leads not found on the CoStar Group web news pages.
Sign up for the Watch List E-Mail Alert. A new issue is published late each Wednesday.