In April, the Trepp CMBS delinquency rate posted its lowest reading in more than two years: The 47-basis-point (bp) drop was the biggest one-month gain since Trepp began publishing the number in the fall of 2009. All major property types saw their delinquency rates fall in April. Hotel and apartment loans led the pack, each with more than 100 bp in improvement. The delinquency rate for U.S. commercial real estate loans in CMBS was 9.03% in April, the lowest reading since November 2010’s 8.92%.
The resolution of distressed CMBS loans was a major driver that lowered the delinquency rate in April. Over $1.6 billion in loans were resolved with losses during the month. The removal of these loans from the ledger of delinquent assets created 30 bp of downward pressure on the delinquency number.
Additionally, over $800 million in loans delinquent in March managed to pay off without a loss in April. The removal of these loans from the delinquent category added 15 bp of downward pressure to the rate. Loans that cured put an additional 35 bp of downward pressure on the delinquency rate.
As for the downside, that too managed to see significant improvement in April. The $1.6 billion in newly delinquent loans in April put about 30 bp of upward pressure on the delinquency rate. This was well below the average of $2.7 billion in new delinquencies in February and March.