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Hotel Delinquency Leads CMBS Rate Down

CMBS delinquency declines 47 BPS in April

May 23, 2013

By Mortgage Daily staff

The rate of delinquency on securitized commercial mortgages tumbled during April. While most categories of commercial real estate experienced a decline in delinquency, it was the hotel property category that saw the biggest drop.

A decline of 47 basis points from March left delinquency of at least 30 days on commercial mortgage-backed securities at 6.736 percent as of the end of last month.

A far more substantial improvement has been made from April 2012, when the rate of CMBS delinquency was 8.190 percent.

The statistics were based on the $731.02 billion in CMBS rated by Morningstar Credit Ratings LLC as of the end of last month.

Out of the Morningstar-rated deals, $49.54 billion were delinquent as of April 30, declining from $52.83 billion at the end of the previous month to the lowest level since February 2010's $47.8 billion.

At the same point in 2012, there were $58.37 billion in past-due CMBS loans.

"While approximately $1.61 billion in newly delinquent loans were reported with the April 2013 remittance, a much larger $5.09 billion in loan resolutions (including loan payoffs, liquidations, and returns to performing status) were also reported, resulting in a $3.48 billion net positive effect to the overall delinquent unpaid balance," the ratings agency said. "In addition, delinquent activity in April 2013 was impacted by monthly liquidations totaling $873.48 million across 51 loans, at an average loss severity of 49.1 percent."

Helping to pull down delinquency were hotel loans, with the past-due rate falling to 7.4 percent from 9.2 percent in March.

A 40-basis-point decline each was recorded for multifamily, retail and office loans -- with their respective delinquency rates finishing April at 3.9 percent, 6.8 percent and 9.6 percent.

The rate of late payments on industrial property loans fell 20 BPS to 11.5 percent last month.

Delinquency on loans secured by healthcare properties was 10 BPS worse than in March, leaving the rate at 6.2 percent.

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