Delinquency on commercial mortgage-backed securities hasn’t been this low in more than two years, and the degree of improvement was the best on record. While past-due payments in every property category were lower, it was loans secured by hotel properties that had the biggest improvement.
There was a nice improvement from March in overall CMBS delinquency, with the 30-day rate falling 47 basis points to land at 9.03 percent as of April 30. Commercial real estate loan delinquency had been up 8 BPS in the prior report.
The 30-day rate has shown significant improvement from April 2012, when the rate was 77 basis points higher.
Delinquency on CMBS loans hasn’t been this low since November 2010.
In addition, it was the biggest one-month drop in the rate since New York-based Trepp LLC first began reporting CMBS delinquency in 2009.
The strong CMBS performance was attributed to a confluence of factors; loan resolutions were $1.6 billion, payoffs were $0.8 billion and loan modifications contributed 80 BPS of downward pressure.
“Everything is working for the CMBS market right now, and the result is a sharp drop in delinquencies,” Trepp senior managing director Manus Clancy said in the report. “Spreads remain low, allowing many formerly marginal properties to get refinancing. Special servicers are continuing to resolve many distressed assets with modifications and the pace of liquidation remains high.
“All of these factors should continue to push the rate steadily downward.”
CMBS delinquency on lodging loans turned in the biggest improvement last month. Thirty-day delinquency on loans secured by hotel properties tumbled 152 BPS from March to 10.30 percent.
The next-best performing category was multifamily, with apartment mortgages exhibiting an 11.67 percent rate — 106 BPS better than in March. Despite the sizeable improvement, multifamily delinquency was higher than for any other property type.
Office property loans secured the third-largest decline from March: 34 BPS. That put last month’s office delinquency rate at 10.26 percent.
While CMBS loans secured by retail properties had the second-smallest improvement — 23 BPS — they still had the lowest April rate: 7.68 percent.
At 18 BPS, the decline in the 30-day rate on industrial property loans was the smallest of all categories. Industrial loan delinquency was 11.54 percent.
