10.1.13: U.S. CMBS Delinquency Report: Rate Declines Sharply in September, Continuing Year-Long Trend

According to Trepp, the CMBS delinquency rate continued its impressive decline in September, marking the fourth consecutive month the rate has fallen. In doing so, the commercial real estate markets shrugged off worries about Syria, the debt ceiling, and the potential impact of tapering bond purchases by the Federal Reserve.

The rate dropped 24 basis points (bp) over the course of the month, bringing the delinquency rate for U.S. commercial real estate loans in CMBS to 8.14%. The Trepp delinquency rate has now fallen 220 bp since the summer of 2012 when the rate peaked at 10.34%. The September rate is the lowest reading since July 2010.

There were about $1.7 billion in newly delinquent loans in September, a sharp reduction from the $2.5 billion in August. These loans put upward pressure of 31 bp on the delinquency rate. Offsetting these new delinquencies were $1.9 billion of loans that cured. This put 35 bp of downward pressure on the delinquent loan reading.

In addition, loan resolutions totaled just under $873 million in September. This represents one of the lowest monthly levels of resolved loans in recent months. Removing these distressed loans from the pool of delinquent assets created 16 bp of downward pressure on the delinquency number last month.

One aspect of the market that merits surveillance over the next few months is the situation with J.C. Penney. The stock’s deep decline, along with worries that store closings may be on the horizon, could weigh on the CMBS and CRE markets in the near term.

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This entry was posted in CMBS, CMBS Securities, Commercial Mortgage-Backed Securities, Michael D. Sneden, News & Recent Closings, The Banker's Mortgage Conduit, Valuexpress and tagged , , , , , , . Bookmark the permalink.

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