Late payments on securitized commercial mortgages dropped sharply in February, marking the eighth straight month of declines.
The Trepp CMBS Delinquency Rate is now 4.51%, a decrease of 32 basis points from the January level.
After rising for much of the period between March 2016 and June 2017, the delinquency level has since receded as most of the loans loosely underwritten in the “bubble years” of 2006 and 2007 passed their maturity date and were resolved (albeit, sometimes with losses).
Since June 2017, the Trepp CMBS Delinquency Rate has fallen by 124 basis points.
“It is now possible that the rate could break the post-crisis low from February 2016 over the next few months, which is a prediction we feel comfortable making,” the data provider said in a report published Thursday.
The February 2018 rate is 80 basis points lower than the year-ago level. The reading hit a multiyear low of 4.15% in February 2016, and the all-time high was 10.34% in July 2012. The rate is lower by 38 basis points year-to-date.
Almost $600 million in loans became newly delinquent in February, which put 13 basis points of upward pressure on the delinquency rate. More than $800 million in notes were cured last month, which reduced the delinquency rate by 20 basis points. In addition, more than $700 million in previously delinquent CMBS debt was resolved with a loss or at par in February. Those resolutions shaved 17 basis points off the February reading. Another large increase in the denominator of newly issued loans accounted for the difference.
By property type, the biggest decrease in delinquencies was hotel loans, which plunged 128 basis points to 3.23%.
The office delinquency rate decreased by 38 basis points to 5.46%.
The retail delinquency rate dropped 14 basis points to 6.16%.
The industrial delinquency rate fell 6 basis points to 5.54%.
Not every property type experience a decline in late payments, however. The multifamily delinquency reading moved up 32 basis points to 2.40%. Apartment loans remain the best performing major property type, however.