Big spike in CMBS loan delinquencies

Long Island Business News - David Winzelberg - 29 Jun 2017

The delinquency rate for U.S. commercial mortgage-backed securities loans took its biggest jump in five years.

The rate of CMBS real estate loan delinquencies climbed to 5.75 percent in June, an increase of 28 basis points from May and the largest hike since March 2012, according to a report from Trepp, a Manhattan-based analyst of the CMBS loan industry. By comparison, the CMBS loan delinquency rate was 4.6 percent a year ago. After hitting a post-recession low of 4.15 percent in Feb. 2016, the loan delinquency rate has risen in 13 out of the last 16 months.

Some $2.4 billion in loans became newly delinquent in June and about two-thirds of that came from loans that reached their balloon date and weren’t paid off.

The CMBS loan delinquency rate increased across all real estate sectors. The worst performing sector in June was industrial real estate with a loan delinquency rate of 7.57 percent followed closely by office real estate with a 7.46 percent rate. The best performing sector was lodging with a 3.53 percent delinquency rate. Multifamily registered a 3.92 percent delinquency rate, while retail real estate had a 6.65 percent rate of loan delinquencies.