The 9.37% CMBS delinquency rate in February was lower both sequentially and compared to year-ago monthly figures by Trepp's measure.

However, the company noted that whether this is a true sign of improvement depends in part on the fate of paying loans that are past their maturity date but have not yet been modified, refinanced or foreclosed upon.

The 15 basis point decline from January and two basis point drop from a year ago to 9.37% is based on data in which loans past their balloon date but are current in interest payments are considered “current.”

“Had these loans factored into the overall delinquency rate, the rate would have been 10.57% —up 22 basis points for the month,” Trepp said in its most recent delinquency report.

Trepp senior managing director Manus Clancy said that the company established the practice of categorizing these loans as current pre-downturn when there were relatively few in this category and the company has decided to continue it for the sake of keeping its current statistics comparable to historic data.

But particularly now, when an inordinate amount of five-year loans from the peak of the “boom” period of loose underwriting and high volume are maturing, the company has been careful to footnote the way the categorization works and its bearing on performance, he said.

Clancy said in a press release that the delinquency rate should remain relatively stable if loans in this category are modified or refinance, but said the market should “watch out if these loans slide into foreclosure.”

He noted the concern should peak this year and thereafter subside for at least the next two years as the vintages that would be hitting their five-year maturities in 2013 and 2014 would be loans from 2008-2009, when the market had tanked and become ultra-cautious in a way that choked off issuance and risky collateral.

Other monthly Trepp delinquency data of note in February included what appears to be a less ambiguous 74 basis point drop in multifamily delinquencies to 14.65% from the previous month and a 1.96% decline in that category from the same month the previous year.


Lodging delinquencies, at 11.05%, also were down notably by 3.56% from a year ago and 1.04% from the previous month.

Industrial, office and retail delinquencies continued to trend generally upward. Industrial, at 12.37%, was up 23 basis points from the previous month and 2.07% from the same month a year ago.

Office delinquencies were 9.04% compared to 8.9% the previous month and 7.1% the same month a year ago. Retail delinquencies were 8%, up from 7.88% in January and 7.81% in February of last year.

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