The balance of past-due outstanding loans included in commercial mortgage-backed securities fell for the fourth month in a row, while the rate of delinquency sits at the lowest level since 2010. But concerns about market conditions could push the rate up 100 basis points. Industrial property loans were the worst performers.
There were $57.47 billion in securitized commercial real estate loans that were delinquent during February, lower than $59.12 billion in past-due mortgages during January.
It was the fourth consecutive month that the balance of delinquent loans declined.
Morningstar Research, which provided the statistics, noted that total CMBS outstanding also declined, to $718.35 billion from $720.18 billion. The total was based on CMBS available for review.
That brought the 30-day delinquency rate to 8.001 percent last month. Delinquency, which includes foreclosures and real-estate-owned properties, hasn’t been this low since October 2010, when the rate was 7.771 percent.
In January, past-due loans CMBS loans accounted for 8.209 percent of all securitized CRE loans. Morningstar said CMBS delinquency was 8.276 percent during February 2011.
“The movement in both delinquent unpaid balance and percentage continues to be impacted by the size and amount of loan liquidations, modifications, extensions and resolutions reported on a monthly basis, along with new balloon maturity defaults,” the report stated. “These items, as a whole, should lead to continued volatility in the reporting of new delinquency levels for the remainder of 2012.”
Securitized industrial loans climbed from 10.8 percent in January to 11.2 percent — the highest rate of any property type and the biggest increase.
Hotel loans followed, though hotel delinquency dropped to 9.6 percent last month from 10.2 percent.
After that was the office rate of 8.8 percent, retail delinquency of 7.7 percent and multifamily late payments at 7.2 percent.
Securitized healthcare property loans had the lowest rate: 5.5 percent. Delinquency on healthcare loans fell 140 BPS — the biggest drop of any category.
The ratings agency continued to warn that overall CMBS delinquency has the potential to reach 9 percent this year because of lenders’ reluctance to approve requests for loan modifications and restructurings.
“If the credit markets do not recover sufficiently to handle the upcoming balloon maturity risk in existing CMBS, or additional distressed loans already on the Morningstar Watchlist experience default, we could easily reach this level,” Morningstar stated.
