CMBS loan delinquencies tick up in March

The Scotsman Guide - Victor Whitman - 02 May 2017

Loan delinquencies underpinning commercial mortgage-backed securities (CMBS) ticked up for the fourth consecutive month in March.

The delinquency rate rose just one basis point to 3.05 percent, Morningstar Credit Ratings reported. The delinquency rate has risen 22 basis points in a year, but March represented the ninth month where the rate hovered around 3 percent, according toMorningstar.

CMBS loan liquidations totaled just under $2 billion in March, the third consecutive month above $1 billion. The average weighted loss severity fell 16.5 percent points in March to 42.6 percent. The overall balance exposure of loans in special servicing fell by $352.1 million to $27.7 billion. The specially-serviced rate has hovered around 3.6 percent for the past five months.

Loans collateralized by office and retail assets were the weakest sectors by property type, representing a combined 69 percent of the delinquent unpaid principal balance.  Hotel properties showed the most deterioration over the year, however. The delinquent balance rose by 16.4 percent year over year in March to $2.44 billion, Morningstar said.