Trepp: CMBS Delinquencies ‘Barely Budge’

The commercial mortgage-backed securities delinquency rate held steady in April, increasing just one basis point to 4.23 percent, reported Trepp, New York.

April represented the second straight month that the delinquency rate crept higher following large decreases in both January and February. One year ago, Trepp’s U.S. CMBS delinquency rate equaled 5.72 percent.

Brian Olasov, Executive Director with Carlton Fields, New York, said any incremental changes in delinquency ratios reflect a “shrinking denominator” of outstanding CMBS in equal measure to changes in delinquent loan balances.  “New issuance has been slow enough that it’s not replacing amortizations and payoffs from legacy CMBS loans,” he said. 

Olasov noted that he has seen a pause in new lending where lenders across most sectors have turned cautious. “In the coming months, this is bound to place additional pressure on maturing loans with limited refi opportunities,” he said. 

Trepp said more than $600 million in loans were cured last month, which pushed delinquencies 12 basis points lower. About $1.1 billion in loans became newly delinquent, which put 21 basis points of upward pressure on the delinquency rate.

The retail delinquency rate dipped 13 basis points and the multifamily delinquency rate fell two basis points to 5.20 percent and to 2.32 percent respectively, Trepp said. Apartment loans remain the best performing major property type.

Industrial, hotel and office delinquency rates all increased in April. Industrial sector delinquencies inched up five basis points to 5.95 percent, the office delinquency rate increased seven basis points to 5.30 percent and the lodging delinquency rate jumped 11 basis points to 2.87 percent, Trepp reported. 

Meanwhile, prices of loans underlying the CMBS universe rose slightly in March, reported loan marketplace DebtX, Boston. The estimated price of whole loans securing CMBS increased four basis points to 99.6 percent, DebtX Managing Director Will Mercer said.

“CMBS prices posted a slight increase in March and were unchanged year-over-year,” Mercer said. “The Treasury yield steepened during the month, with rates shorter than five years dropping and longer-term rates increasing.”

Median adjusted loan-to-value ratios remained at 57 percent and the median debt service coverage ratio remained at 1.48, Mercer said. The median estimated loan yield held steady at 4.3 percent.