Late payments on securitized commercial mortgages fell again in January for the seventh straight month.
The Trepp CMBS Delinquency Rate for U.S. commercial real estate loans in CMBS is now 4.83%, a decrease of six basis points from the December level.
The delinquency rate moved up in 13 of the 16 months between March 2016 and June 2017. However, the delinquency level has receded consistently since June as most of the bubble-year loans from 2006 and 2007 have passed their maturity date and have been resolved.
“In other words, fewer loans from the bubble years are defaulting and those that did default are being resolved away (often with losses) at a decent clip,” Trepp stated in its monthly report. Since June 2017, the Trepp CMBS Delinquency Rate has fallen by 92 basis points.
“There were actually more new delinquencies in January than loans that were cured and resolved, which indicates that the rate could have swelled slightly. However, the surge of new issuance in the second half of 2017 helped increase the number of performing loans substantially,” the report states.
Almost $1.35 billion in loans became newly delinquent in January, which put 32 basis points of upward pressure on the delinquency rate. About $290 million in loans were cured last month, which reduced the delinquency rate by seven basis points. Nearly $800 million in previously delinquent CMBS loans were resolved with a loss or at par in January. Those resolutions shaved 19 basis points off the January reading. The large increase in the denominator of newly issued loans accounted for the difference.
By property types, the biggest decline in delinquencies was in offices, which dropped 56 basis points to 5.84%.
The multifamily delinquency reading dropped 28 basis points to 2.08%; apartment loans remain the best performing major property type.
The industrial delinquency rate fell seven basis points to 5.60%.
Delinquencies in two property types increased. The retail delinquency rate rose 17 basis points to 6.3%, and the reading for hotel loans climbed 69 basis points to 4.51%.