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Delinquency Rate Slows Improvement, Inches Down by Single-Digit in July

Download the full report for data on the top five loans taking losses and top five newly delinquent loans in July.

The Trepp CMBS delinquency rate barely extended its winning streak to fourteen months in July. The delinquency rate for US commercial real estate loans in CMBS is now 6.04%, one basis point lower month-over-month. July’s reading is 244 basis points lower than the year-ago level. Year-to-date, delinquencies have fallen 139 basis points from 7.43% as of December 31, 2013.

Loan resolutions totaled just over $600 million in July, making it one of the lowest monthly totals in the last few years. Removing these distressed loans from the delinquent loan pool put 11 basis points of downward pressure on the delinquency rate. Loans that cured reduced delinquencies by 13 basis points, but that was more than offset by loans that were newly delinquent. New delinquencies added about 23 basis points to the delinquency rate.

The Numbers:
• The overall US CMBS delinquency rate decreased one basis point to 6.04%.
• The percentage of loans 30+ days delinquent or in foreclosure was 6.05% in June and 6.27% in May.
• The percentage of loans seriously delinquent (60+ days delinquent, in foreclosure, REO, or non-performing balloons) is now 5.88%, down four basis points for the month.
• If defeased loans were taken out of the equation, the overall 30-day delinquency rate would be 6.32%—down one basis pointfrom June.
• There are currently $32.1 billion in delinquent loans, which is down from $32.4 billion last month. This number excludes loans that are past their balloon date but are current on their interest payments.

Historical Perspective:
• One year ago, the US CMBS delinquency rate was 8.48%.
• Six months ago, the US CMBS delinquency rate was 7.25%.
• One year ago, the rate of loans seriously delinquent was 8.18%.
• Six months ago, the rate of loans seriously delinquent was 7.02%

Property Type Analysis:
• The industrial delinquency rate saw the biggest month over month improvement in July—it fell 50 basis points to 7.89%.
• The lodging delinquency rate shed 20 basis points and is now 5.19%. Lodging has surpassed retail as the best performing major property type.
• The multifamily delinquency rate dropped 15 basis points to 9.24%. Apartment loans are still the worst performer among the major property types.
• The office delinquency rate inched up eight basis points to 6.52%.
• The delinquency rate for retail loans increased 10 basis points to 5.53%.