April CMBS Delinquency Rate Reaches 2nd Highest Reading

Just two months after matching its lowest reading in a year, the Trepp CMBS Delinquency Rate reversed course and is now close to matching the highest reading of all time.

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At 9.80 percent, the April 2012 rate for 30-day plus delinquencies is just 8 basis points shy of the July 2011 record when it was 9.88 percent, according to ""Trepp"":http://www.trepp.com/, a provider of information, analytics and technology to the CMBS, commercial
real estate, and banking markets.

April's rate jumped 12 basis points from March after already increasing 31 basis points from the month before in February.

After two months of relatively modest loan loss resolutions amounting to $1 billion or less, loan loss resolutions increased to $1.4 billion in April.

The removal of these loans from the delinquent loan category put about 24 basis points of downward pressure on the delinquency rate.

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Loans that were newly delinquent totaled about $3.8 billion, putting about 64 basis points of upward pressure on the rate, and while cured loans put about 33 basis points of downward pressure on the rate.

Altogether, the effect was a net increase of seven basis points in the rate.
""The bucket is filling faster than it can be drained,"" said Will Sledge, managing director of Mission Capital Advisors in New York. ""It's not beyond what we have expected all along that five year delinquencies from poorly underwritten assets are bearing themselves out.""

Also, the percentage 60 or more days delinquent, including those in foreclosure, REO or nonperforming balloons is 9.41 percent, up 31 basis points.

Overall, the increase in the delinquency rate was driven largely by office loans. The office delinquency rate was up 82 basis points to a new all-time high of 10.23 percent - the first time the office rate has reached double digits.
On the other hand, the multifamily delinquency rate fell 21 basis points, but is still the worst type of property with a rate of 15.18 percent.

Industrial delinquency rate is down 18 basis points, and remains the second worst category.

Retail delinquency rate dropped 26 basis points to 7.98 percent and is the best performing major property type.

The hotel delinquency rate slipped eight basis points and is second best property type.