CMBS data provider Trepp just released its November 2011 U.S. CMBS Delinquency Report today.
Overall for the month, the delinquency rate for U.S. commercial real estate (CRE) loans in CMBS transactions decreased 26 basis points to 9.51%.
This was the second largest dip in 2011, surpassed only by August's 36 point decrease. The rate has now dropped in four of the eleven months of this year. The delinquent loans' value currently totals $58.5 billion.
But, the delinquency rate should rise in the coming months. This is as the 2007 vintage loans that were originated under the weakest underwriting standards begin to reach their five-year balloon maturity dates. This will add to the stress that placed on the delinquency rate by the CMBS issuance slow down.
By property type, the hotel delinquency rate dropped 184 basis points to 12.28%. The industrial delinquency rate rose 61 basis points to 12.20% According to Trepp, this has threatened to make lodging the second worst-performing property type.
The office delinquency rate went down 19 basis points to 8.76% while the multifamily delinquency rate dropped 55 basis points to stay as the worst performing major property type with a 16.18% rate. The retail delinquency rate tightened nine basis points to 7.52%, staying as the best major property type.
“It is quite possible that this will represent the best reading for a while. With the first of the dreaded 2007 vintage loans starting to mature, severe upward pressure will be put on the rate over the next few months" said Manus Clancy, senior managing director at Trepp. "Even if the 2007 vintage is only ‘as bad’ as the 2006 vintage has been, the rate could easily go up 75 basis points. So for now, further improvements in the delinquency rate could be elusive."
