Trepp: CMBS Late Pays Up Again in March, Led by Industrial

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Late payment on securitized commercial mortgage rose again in March, led by industrial and retail properties.

The delinquency rate for U.S. commercial real estate loans in CMBS is now  5.37%, an increase of six basis points from February, according to Trepp. The reading has consistently climbed over the past year as loans from 2006 and 2007 have reached their maturity dates and have not been paid off via refinancing. It has moved higher in 11 of the last 13 months.

The rate is now 115 basis points higher than the year-ago level, and 14 basis points higher year-to-date. It hit a multi-year low of 4.15% in February 2016. The all-time high was 10.34% in July 2012.

In its monthly report, Trepp reiterated that "it is hard to see the rate going down anytime in the near future" given the large amount of pre-crisis loans coming due over the next few months. Delinquencies could level off or retreat by the end of the year, however.

In March, almost $2.0 billion in loans became newly delinquent. This put 46 basis points of upward pressure on the delinquency rate. Over $500 million in loans were cured last month, which helped push delinquencies lower by 12 basis points. About $1.1 billion in CMBS loans that were previously delinquent paid off with a loss or at par last month, which also helped mitigate the jump in new delinquencies. Removing those previously distressed assets from the numerator of the delinquency calculation moved the rate down by 26 basis points. The shrinking denominator (the amount of outstanding loans in the calculation) accounted for the rest of the difference.

Breaking delinquencies down by property type, the industrial delinquency rate shot up 109 basis points to 7.03%; the delinquency reading for lodging notes increased 27 basis points to 3.70%; and the delinquency rate for retail loans moved up 19 basis points to 6.12%.

However the multifamily delinquency rate dropped 22 basis points to 2.60%, while the office delinquency rate fell 27 points to 7.38%

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