The Trepp CMBS delinquency rate posted a 47 basis point drop in April, its lowest reading in more than two years. The delinquency rate for US commercial real estate loans in CMBS was 9.03% in April, the lowest reading since the November 2010 rate of 8.92%.
The resolution of distressed CMBS loans was a major driver that lowered the delinquency rate in April. The removal of these loans created 30 basis points of downward pressure on the delinquency number, according to Trepp.
Over $800 million in loans that were delinquent in March managed to payoff without a loss in April. Almost all of these notes were listed as non-performing loans that were past their maturing dates as of March. The removal of these loans from the delinquent category added 15 basis points of downward pressure to the rate.
Loans that cured put an additional 35 basis points of downward pressure on the delinquency rate. Improvement in this category was spearheaded by several large loan modifications, including the $375 million Belnord loan.
There were $1.6 billion in newly delinquent loans in April, which put about 30 basis points of upward pressure on the delinquency rate. This was well below the average of $2.7 billion in new delinquencies in February and March.
All major property types saw their delinquency rates fall in April. Hotel and apartment loans led the pack, each with more than 100 basis points in improvement.
The reduction in the lodging rate was a result of three big MSREF Portfolio loans paying off in full. The three loans totaled over $500 million, and all three were listed as non-performing loans that were past their maturity dates as of March.
The drop in the multifamily rate was driven by the curing of the aforementioned Belnord loan and the restructuring of the $194.6 million Babcock and Brown FX3 portfolio loan. The latter was written down by over $67 million, but with the assumption of the note by the new borrowers, the loan was brought current.