NEW YORK CITY—Following a one-month hiccup that saw CMBS delinquencies tick upward by six basis points, they're back to trending in the right direction. The seven-bp decline in September puts late-pays at 6.03%, or one bp lower than they were in July, according to Trepp.

August's upward movement marked the first time CMBS delinquencies had moved in that direction since May 2013. The September late-pay rate is 211 bps lower than a year ago, and thus far in 2014 delinquencies have fallen 140 bps.

September saw nearly $1.4 billion in newly delinquent loans, putting 26 bps of upward pressure on the delinquency rate. The largest loan that became delinquent in September was the $116-million Dallas Market Center loan, which is split between BACM 2004-4 and MLMT 2004-BPC1.

Loans that cured totaled over $600 million in September, which helped push the delinquency rate down by additional 13 bps. About $1.8 billion in CMBS loans were liquidated with losses during the month.

Of those loans, $1.2 billion were delinquent as of the month prior to resolution. The removal of these previously distressed assets from the numerator of the delinquency calculation exerted another 22 bps of downward pressure on the delinquency rate. The largest loss resolutions by loan balance came from the Solana loan (BACM 2007-1 and JPMCC 2007-LDPX), the World Market Center loans (BSCMS 2007-PWR15 and BSCMS 2005-PWR10), the Westin Casuarina loan (WBCMT 2007-C32) and the CVI Multifamily Apartment Portfolio loan (CSMC 2007-C1).

There are currently $31.8 billion in delinquent loans, which is down from $32.5 billion in the previous month, according to Trepp. The figure includes loans that are past their balloon date but are current on their interest payments.

By sector, industrial was the worst-performing property type a year ago with delinquency of 11.59%, but in September registered the biggest improvement. The reading fell 73 basis points to 7.66%.

During September, the lodging delinquency rate dipped 31 bps and is now 5.06%. Lodging remains the best performing major property type, although a year ago that distinction was held by retail.

The multifamily delinquency rate dropped 10 bps to 8.99%. Apartment loans continue to be the worst performing among the major property types; in September 2013 multifamily's 11.13% late-pay rate was second only to that of industrial. The month also saw office delinquency rate improve by five bps to 6.56%, and that of retail head in the opposite direction, increasing 17 bps to 5.86%.

Trepp notes that CMBS loans have continued to become defeased at a substantial rate. Over $1.9 billion in newly defeased loans appeared in the database in September, not including agency defeasances. The largest of these was the $345-million Mall of America loan in COMM 2006-C8, although that loan has two additional components—CD 2007-CD4 and GECMC 2007-C1—that have yet to be reported as defeased. This virtually assures that this month's volume of defeased loans will also be large, says Trepp.

Instant Insights /

CMBS Late-Pays Head the Right Way Again

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