NEW YORK CITY-March’s CMBS delinquency rate reached its highest level ever in March, climbing three basis points to 9.42%, Trepp reported Tuesday. On the other hand, the locally based CMBS information provider’s latest report notes that it’s only a three-bps increase, providing further evidence that “the market is healing.”

For two months in a row, “we’ve seen the delinquency rate increase in the low single digits,” representing “some of the best readings we've seen since the credit crisis began,” Trepp managing director Manus Clancy says in a release. “We believe that the overall delinquency rate will continue to rise over the next six months, but at a pace similar to what we've seen recently, not the 40-bp jumps that we saw in 2009 and early 2010. You cannot discount entirely, however, the possibility that we see the rate decline slightly in one of these months.”

Trepp says the overall delinquency rate of loans past due at least 30 days is benefiting from new CMBS issues included in the statistics. With the securitization market enjoying a resurgence—Standard & Poor’s put the value of new US CMBS issues for the first quarter at $8.7 billion—the relative good health of new product is likely to push the delinquency rate lower, according to Trepp. CMBS deals from 2010 are now showing up in Trepp’s calculations; the firm includes CMBS issues after they’ve seasoned for six months.

Similarly, ratings agency Realpoint, based in Horsham, PA, says in its most recent CMBS report, “As the market continues to grow in 2011, some delinquency growth experienced in the trailing 12 months will obviously be offset by any new issuance’s speed to market. As liquidations of severely distressed defaulted loans picked up speed in the latter half of 2010, and modifications or forbearance at the loan level continue to be discussed between borrowers and special servicers, there may be a delinquency ‘leveling-off’ period” through the end of this year.

Worst-performing of the major property types remains multifamily, although Trepp notes a 40-bp drop to 16.21%. The hotel sector is coming up on multifamily from the opposite direction, with a steep 136-bp increase to reach 15.97% at the end of March, Trepp says. Industrial’s delinquency rate has fallen 19 bps since February to reach 10.25%, while retail is in fourth place with a 7.72% delinquency rate after a nine-bp decline. Office remains the best-performing sector, although it rose slightly to reach 7.13% during the month.

Among highly seasoned CMBS transactions, balloon default risk is a looming possibility “as loans are unable to pay off as scheduled,” according to Realpoint. In many instances, collateral properties that have otherwise generated stable cash flow can’t refinance their balloon payment at maturity, mostly due to a lack of available refinance sources, according to the ratings agency. “In some cases, little or no amortization has taken place due to interest-only payment structures, while collateral values have also declined.”

Further, Realpoint notes that large floating-rate loan refinance and balloon default risk continues to grow. “Many such large loans are secured by un-stabilized or transitional properties reaching final maturity extensions (if they have not done so already), or fail to meet debt service or cash flow covenants necessary to exercise in-place extension options.”