‘A Positive Sign’ Emerges in CMBS Late-Pays

Clancy sees good news in the “pause in the upward momentum” of CMBS delinquencies.

NEW YORK CITY—It wasn’t a dramatic decrease, but coming after five consecutive months of upward movement in the CMBS delinquency rate, it was an encouraging one. Trepp LLC said Monday that the late-pay rate for securitized commercial mortgages declined eight basis points in August to 4.68%, beginning to reverse a 61-bp uptick since a cyclical low of 4.15% was reached in February.

“The pause in the upward momentum of the delinquency rate is a positive sign for investors,” says Manus Clancy, senior managing director at Trepp. “With about 18 months to go until the loans representing the wall of maturities are fully digested, we remain cautiously optimistic that losses on these 2006 and 2007 notes will come in at the low end of expectations.”