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CMBS Delinquencies Rise, but Trepp Sees Signs of Market Healing

The commercial mortgage research and analytics firm ""Trepp LLC"":http://www.trepp.com says the delinquency rate for loans held in U.S. commercial mortgage-backed securities (CMBS) edged higher in March, but the New York-based agency says it's seeing clear signs that the market is starting to heal.

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Trepp reports that the percentage of CMBS loans 30-plus days delinquent, in foreclosure, or REO rose 3 basis points last month to 9.42 percent.

That's the highest delinquency rate ever recorded for U.S. commercial real estate loans packaged into mortgage bonds, but Trepp says the month-over-month increase is one of the smallest it's logged in over two years ago.

Based on Trepp's analysis of activity and loan performance for its March report, the value of delinquent loans within CMBS pools now stands at about $61.5 billion.

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""For the second straight month, we've seen the delinquency rate increase in the low single digits,"" commented Manus Clancy, managing director of Trepp. ""These are some of the best readings we've seen since the credit crisis began.""

Clancy expects the overall delinquency rate will continue to rise over the next six months, but at a pace similar to what's been seen recently, not the 40 basis point jumps that characterized 2009 and early 2010.

""You cannot discount entirely, however, the possibility that we see the rate decline slightly in one of these months,"" Clancy noted.

The lodging-hotel sector was the main driver behind the rise in the overall delinquency rate in March. Delinquencies in this category increased 136 basis points to 15.97 percent.

The multifamily sector, however, remains the worst performing property type. Even though its delinquency rate dropped 40 basis points last month, it came in at 16.21 percent. Multifamily delinquencies have declined for two straight months now.

The retail and industrial sectors also improved by 9 and 19 basis points, respectively. The retail delinquency rate now sits at 7.72 percent, while industrial properties registered a delinquency rate of 10.25 percent.

The office sector again registered the lowest rate among all property types at 7.13 percent, although it increased on a month-over-month basis by 3 basis points.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.
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