Signs of Improvement Elusive as Rate Increases for Fifth Straight Month
NEW YORK, July 30, 2012 — Trepp, LLC, the leading provider of information, analytics and technology to the CMBS, commercial real estate and banking markets, released its July 2012 U.S. CMBS Delinquency Report today (available at http://www.trepp.com/knowledge/research).
In July, the U.S. CMBS delinquency rate set an all-time high once again, moving up another 18 basis points to 10.36%. This latest move puts the delinquency level up 97 basis points since February and makes July the fifth straight month in which the rate has increased.
There are $59.5 billion in CMBS loans now delinquent, which excludes loans that are past their balloon date but are current in their interest payments. There are currently $75.4 billion in loans that are with the special servicer, representing almost 4,000 loans.
Last month Trepp noted that after climbing for four months, the CMBS Delinquency Rate was poised to plateau. The increasing delinquency level had been driven by a wave of 2007 loans that had reached their balloon dates but could not be refinanced. With the volume of these troublesome 2007 loans hitting a peak in the first half of 2012, Trepp believed the second half of the year would be kinder to the delinquency rate. While Trepp still stands by that prediction, signs of improvement in CMBS delinquencies were elusive in July.
“We don’t anticipate many more increases in the rate over the next six months, but we don’t see a lot of improvement either,” said Manus Clancy, senior managing director of Trepp. “The loans that were unable to refinance over the last year will continue to linger with the special servicers, much like motorists trying to get into London over the next two weeks.”
The only major property type to improve was the retail loan segment. Lodging, office, residential and industrial loans all saw higher delinquency rates in July.
Loans resolved with losses stayed essentially flat with June’s total. About $1.4 billion in loss resolutions were seen in July. The removal of these loans from the delinquent loan category attributed about 24 basis points of downward pressure on the delinquency rate. Loans that were cured put an additional 40 basis points of downward pressure on the rate. Loans that were newly delinquent, totaling about $4.6 billion, put upward pressure on the rate of about 81 basis points. In total, this created a net increase of 17 basis points in the rate.
For additional details, request the June U.S. CMBS Delinquency Report at http://www.trepp.com. For daily CMBS and bank trading ideas, credit events and commentary, register for TreppWire or follow us on Twitter.
About Trepp, LLC
Trepp, LLC is the leading provider of information, analytics and technology to the CMBS, commercial real estate and banking markets. Trepp provides primary and secondary market participants with the tools and insight they need to increase their operational efficiencies, information transparency and investment performance. For more information visit http://www.trepp.com.