Retail remains the best performing major property type in commercial mortgage backed securities, according to Trepp. The delinquency rate in this sector improved by 26 basis points over August figures. However, over the next few months J.C. Penney's financial situation could weigh on the CMBS and CRE markets.
According to Trepp the retail delinquency rate is now at 6.50%. Standard & Poor’s said for retail CMBS it rates, delinquencies fell by $2.1billion to $9.3billion in September.
But possible store closures by J.C. Penney could have a negative impact on CMBS performance, Trepp said. The retailer is a major tenant in this marekt: analysts at Bank of America Merrill Lynch estimate in a report published Monday that between April and the end of August 2013, of the 20 new CMBS conduit priced, 13 contained loans with exposure to J.C. Penney.
Overall CMBS delinquencies continue to improve. The delinquency rate for S&P-rated CMBS fell 28 basis points to 8.56% ($35 billion) on September. remits. New delinquencies totaled $1.3 billion during the month compared with $1.8 billion in resolutions.
Trepp said the rate fell by 24 basis points, bringing the delinquency rate for US CMBS over the month of Sept. to 8.15%. The Trepp delinquency rate has now fallen 220 basis points from its peak of 10.34% in the summer of 2012.
There were $1.7 billion in new delinquencies in September; a sharp decline from the $2.5 billion August total. There are currently $44 billion in delinquent U.S. CMBS loans, excluding loans that are past their balloon date but current on their interest payments. Loan resolutions totaled just under $873 million for the month, which was one of the lowest levels seen in recent months. In August, loan resolutions totaled just over $1 billion.
“The CMBS market managed to shrug off concerns over QE tapering, Syria, and impending government budget issues in September,” said Manus Clancy, senior managing director at Trepp. “Supporting the improvement in the rate was a slowdown in new delinquencies and the addition of new deals to the overall loan pool.”