The U.S. commercial mortgage-backed securities (CMBS) delinquency rate fell in May to 9.6% for loans 30 or more days delinquent, in foreclosure or REO, according to Trepp LLC, New York. Despite a 5-basis-point (bp) decline, it represented the biggest rate drop for U.S. commercial real estate loans in CMBS in nearly two years, setting aside October 2010 – after the Extended Stay Hotels loan resolution. The May decline follows a 23 bp increase in April. The delinquent loan value in May was $61.5 billion.
“Last month [April], the delinquency rate posted its biggest rate of increase since late 2010 – a 23 [bp] jump,” said Manus Clancy, managing director at Trepp. “The increase took many CMBS pros by surprise as it came after three consecutive months of improving results.”
While the delinquency percentage of loans dropped overall last month, seriously delinquent loans – 60 or more days delinquent, in foreclosure, REO or non-performing balloons – increased 6 bp from April to 8.96% in May. Foreclosures were at 2.98% and 90 or more days delinquent were at 2.7%. The industrial delinquency rate increased 120 bp in May, up to nearly 12%. Six months ago, the rate was below 7%. Office delinquencies increased 3 bp in May, but the property type remains the best performing with a 7.23% delinquency rate.
Delinquencies in all other major property types declined for the month. The multifamily rate dropped 6 bp, but it remained the worst major property type with a 16.71% delinquency rate, followed by lodging at 15.37% after an 8 bp decline.
“While there may be additional bumps along the way, we think the May numbers accurately reflect a leveling off in the market,” Clancy said.