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June CMBS Delinquency Rate Shows Mixed Results, Trepp Says

Despite a month-over-month increase in the commercial mortgage-backed securities (CMBS) default rate in June,[IMAGE]

""Trepp LLC"":http://www.trepp.com/main.cgi --a New York based company tracking commercial real estate--still sees hope in its ""latest report."":http://trepp.com/m/Press_release/displayFile.cgi?input=treppwire201007.pdf

The monthly delinquency rate for commercial real estate loans in CMBS showed a jump of 17 basis points, coming in at 8.59 percent for loans 30-plus days delinquent. However, Trepp said this was the best reading since July 2009.

According to Trepp, the past nine months prior to June have seen the increase in delinquencies average 39 basis points per month. The lowest increase prior to June was in February, which saw a 23 basis point jump.


However, despite this apparent slowdown in the growth in month-over-month delinquencies, Trepp reported that when looking at seriously delinquent loans (60-plus days delinquent, in foreclosure, REO, or nonperforming) the June month-over-month delinquency rate jumped 28 basis points. While a significant increase compared to the numbers for loans 30-plus days delinquent, this was an improvement over Mays figures, which reported a 41 basis point increase when looking at seriously delinquent loans.

Breaking down these numbers further, on a sector-by-sector basis, Trepp reported that in June hotel delinquencies jumped 56 basis points from the previous month, reaching a rate about 19 percent for the first time. Multifamily took the dubious honor in Trepp's report of having the second highest delinquency rate among major property types at 14.09 percent, while office delinquencies cam in at just over 6 percent. The study showed that the only major property type to improve in June was the retail sector, which dropped 18 basis points from May.

Despite the modest reprieve seen in June from earlier, larger jumps in the delinquency rate, the news becomes more bleak when you look at the year-over-year perspective. According to Trepp, at this time last year the delinquency rate was only 4.07 percent, and six months ago it only reached 6.05 percent. Similar trends were noted when comparing the percentage of seriously delinquent CMBS loans in default year-over-year. Last year this rate only reached 4.68 percent.

About Author: Rachel Daniels


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