Trepp’s CMBS delinquency rate hit a new low of 8% in October, a level this asset class hasn’t seen since early 2010.
It’s the fifth consecutive drop for CMBS delinquencies. The rate dropped 16 basis points over the course of the month, bringing the 30+ day delinquency rate for US commercial real estate loans in CMBS to 7.98%. The percentage of loans seriously delinquent is now 7.69%
“The government may have shut down this month, but special servicers took no time off,” said Joe McBride, a research analyst at Trepp. “Almost $1 billion in CMBS loans were disposed with losses in October, as servicers continue to work through troubled loans, especially in the retail sector. Much of the improvement in the retail delinquency rate comes from this ‘cleaning out’ of the distressed pipeline.”
Delinquencies could improve by another 50-basis-point decrease in 2013, if CWCapital completes the sale of more than $2.5 billion of distressed assets before the December remittance cycle.
A Barclays report today said that approximately $665 million of CMBS properties serviced by CW Capital are up for bid in December on Auction.com. Nearly 40% of the December auctions are coming from two deals – COMM 2006-C7 and MLCFC 2007-5.
“In addition to the distressed assets that were recently identified for sale, a large number of note sales are also expected from the servicer,” said Manus Clancy, senior managing director of Trepp. “As CW stated that it is looking to sell these before year-end, this could result in the removal of a number of loans from the delinquent category over the next 60 days.”