12.28.15: Self-Storage Properties Best-Performing Asset Class in CMBS

Self-Storage facilities has turned out to be the best-performing asset class in CMBS in terms of delinquency. Self-storage CMBS-backed loans historically have been good performers for several reasons. For one, self-storage properties weren’t prone to being overvalued during the peak of CMBS lending in 2006-2007 as much as other property types were (e.g., office and retail). Meanwhile, self-storage cap rates are significantly lower now than they were when the loans were initiated, allowing owners to easily refinance outstanding balances as they mature.

The sector had total delinquency of under 5% during the 2007-2009 financial crisis period, while other assets including multifamily saw delinquency rate soar past 10%. By 2013, the delinquency rate had declined to 2.31%, according to data from Dominion Bond Rating Service. For self-storage loans with original maturities in 2015, only $6.5 million are delinquent.

“These statistics are fascinating to me, so I had Jim Brett, head of CMBS analytics at ValueXpress, run some reports from our Trepp system,” commented Michael D. Sneden, Executive Vice President at ValueXpress. According to Jim’s findings, the current delinquency (more than 90 days) for the entire self-storage universe in CMBS is $13 million, representing 1.83% of all self-storage loans. Of delinquency, $2 million is post-2007 originations and the balance was originated in 2007 and prior years.

“We are working on a number of self-storage deals and are working to increase our originations of this asset class,” comment Gary Unkel, Senior Loan Originator at ValueXpress. “The buyers of subordinate CMBS (b-buyers) love self-storage and now we know why.”

 

 

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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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