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US CMBS Delinquency Rate Continues to Improve

The Trepp CMBS delinquency rate continued its impressive turnaround in November, which marked the sixth consecutive month of improvement. With a rate decrease of 32 basis points in November, the delinquency rate for US commercial real estate loans in CMBS is 7.66%.

The Trepp delinquency rate has dropped 268 basis points since reaching an all-time high of 10.34% in the summer of 2012. As we noted last month, with only one month of data remaining in 2013, there could still be more meaningful gains for the delinquency rate before New Year’s Day.

November’s rate decrease can be attributed to the following:

  • Almost $1.2 billion in previously delinquent loans were resolved with losses. By removing these delinquent loans from our numerator, the rate saw 22 basis points of improvement.
  • Loans that cured totaled about $2.2 billion in November, which resulted in 40 basis points of downward pressure on the delinquent loan percentage.
  • New delinquencies totaled just over $2 billion in November, which compares to $1.6 billion in October. These loans pushed the rate up by 38 basis points.
  • Loans that were previously delinquent but paid off without a loss totaled almost $245 million in November, which resulted in a five-basis-point decrease in the delinquent loan percentage.

Still to come will be the sale of more than $3 billion of distressed assets and additional note sales by special servicer CWCapital. Preliminary bids for the assets were due in mid-November, so we assume some of these will close in time to hit the December remittance cycle. Removing over $3 billion of non-performing assets from the delinquent loan category would result in a 50-basis-point decrease in the rate, so a delinquency rate that threatens the 7% level may not be out of the question. Regardless of whether these sales hit in December or January, the CMBS delinquency rate should continue to improve in the near-term.

The Numbers:

  • The overall US CMBS delinquency rate decreased 32 basis points to 7.66%.
  • The percentage of loans 30+ days delinquent or in foreclosure:
    Nov ’13: 7.66% Oct ’13: 7.98% Sep ’13: 8.14%
  • The percentage of loans seriously delinquent (60+ days delinquent, in foreclosure, REO, or non-performing balloons) is now 7.30%, down 39 basis points for the month.
  • If defeased loans were taken out of the equation, the overall 30-day delinquency rate would be 7.92%–down 36 basis points from October.
  • There are currently $41.3 billion in delinquent loans. (This number excludes loans that are past their balloon date but are current on their interest payments.)
  • There are $49.6 billion in loans with the special servicer. This represents just over 2,800 loans.

For more information on this month’s delinquency rate, including historical numbers, delinquency status, and rates by major property type, read the full report.
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