Rate falls to pre-crisis low according to Trepp
It’s taken 10 years but the delinquency rate for loans in CMBS fell to its pre-crisis rate in May.
Industry analysts Trepp says that its CMBS Delinquency Rate was 4.12% in May, down 24 basis points from a month earlier and 135 basis points below its May 2018 level.
Having fallen 600 basis points from its all-time high, the index is now at its lowest level since 2008.
“Many market watchers worried that a 10-year Treasury rate greater than 3% could lead to problems for the commercial real estate markets,” said Trepp Senior Managing Director, Manus Clancy. “Early indications are that it has not, as issuance continues to be healthy and distressed legacy loan resolutions have maintained their lively pace. The combination has pushed the delinquency rate down sharply and should continue to do so.”
Office sector is the most improved
The largest month-over-month decline in CMBS delinquencies was in the office sector with a reading of 5.02%, down 55 basis points. With a 295 basis-point drop since May 2017, the sector is also the most improved year-over-year.
Retail has also seen improvement, down 25 basis points to 5.72% in May from April; industrial was down 16 basis points to 4.69%.
The CMBS 2.0+ delinquency rate inched down seven basis points to 0.48% in May. Just 0.39% of 2.0+ debt was marked as seriously delinquent last month as that reading dropped 12 basis points.
The overall CMBS 1.0 delinquency rate ended May with a rate of 47.14%, 24 basis points lower month over month. The rate of serious delinquencies in the 1.0 universe decreased 13 basis points to 47.13% last month.
