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Nearly 7-Year Low for CMBS Delinquency

Mortgage News

An improvement in the monthly performance of securitized commercial real estate loans brought delinquency to an almost seven-year low.

As of the end of February, the 30-day delinquency rate on loans that are part of commercial mortgage-backed securities was 2.76 percent.

It was the first time in nearly seven years that the past-due rate on CMBS loans has been lower than 3 percent based on historical data.

That was according to Morningstar Credit Ratings LLC, which
rates $783 billion in CMBS.

The delinquency rate was 3.09 percent in January and
3.86 percent in February 2015.

“Figures from the January 2016 remittance period were skewed by a servicer’s error on the $1.44 billion CDGJ 2014-BXCH transaction, which has been corrected,” the report stated.

The 30-day rate on CMBS loans secured by retail properties plummeted 317 basis points to 2.07 percent in February 2016.

Also plunging was delinquency on hotel loans — by 202 BPS from January to 2.48 percent.

A 27-basis-point improvement on industrial property loans put the rate at 4.52 percent as of the most-recent month.

At 4.67 percent, delinquency on office building loans was 26 BPS better than in January.

The 30-day rate on healthcare property loans fell 3 BPS to 2.45 percent as of Feb. 29.

Multifamily delinquency, however, inched up a basis point from January to 0.66 percent.

“While the steadily declining delinquency rate is an indicator of the overall health of the CMBS market, Morningstar Credit Ratings LLC expects turbulence this year, as many loans written at the height of the market remain overleveraged and will have difficulty refinancing,” the ratings agency said.

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