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CMBS Defaults Sink, Hotel Delinquency Plunges

Servicers of securitized commercial real estate loans issued just prior to the financial crisis have weathered the storm of defaults on maturing loans, as hotel loans led a plunge in delinquency.

The rate of 30-day late payments on loans that are part of commercial mortgage-backed securities concluded this month at 5.21 percent, sinking 19 basis points from the end of September.

CMBS delinquency become more favorable each month since it was 5.75 percent in June 2017.
In addition, October 2017’s drop was the second-biggest improvement in 19 months.

Those details were revealed Tuesday by Trepp LLC.

“After hitting a post-crisis low in February 2016, the reading climbed consistently for more than a year as loans issued in 2006 and 2007 reached their maturity dates and were not paid off via refinancing,” Trepp said. “In the 16 months between March 2016 and June 2017, the delinquency rate moved up 13 times.

“However, now that the dreaded ‘wave of maturities’ has passed, delinquency levels have receded as well.”

But despite the impressive month-over-month improvement, the rate was worse than 4.98 percent as of Oct. 31, 2016 — though delinquency remains better than 5.23 percent at the end of last year.

At 3.42 percent, hotel CMBS delinquency plunged from Sept. 30, 2017, by 42 BPS — the strongest improvement of any property type.

A 31-basis-point plummet in the rate on CMBS loans secured by industrial properties
left it at 6.24 percent as of today.

Securitized office building loans had a 30-day rate of 6.92 percent, tumbling 18 BPS
from last month.

Retail property loans had a 6.47 percent rate, descending 8 BPS from the previous month.

Although multifamily CMBS loans had the smallest decline from September — 2 BPS — the 2.98 percent rate was the lowest among all property types.

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