NEW YORK CITY—In what Trepp LLC is calling a “five-peat,” CMBS delinquencies edged downward in November for the fifth consecutive month, according to data from Trepp and Fitch Ratings. It marks the second-longest period of declines in late-pays in more than eight years, exceeded only by a 14-month streak in 2013 and 2014.

Trepp is reporting a decline of three basis points from October to 5.18%, while for Fitch-rated CMBS deals the improvement is somewhat greater: a 13-bp drop to 3.37%. Fitch attributes the monthly decline in delinquencies to continued strong new issuance volume and increased resolution activity, with November seeing $5.6 billion of new Fitch-rated CMBS transactions. Meanwhile, resolutions of $843 million exceeded new delinquencies of $479 million, says Fitch.

“The delinquency rate moved up 13 times in the 16 months between March 2016 and June 2017,” Manus Clancy, senior managing director with Trepp, wrote earlier this week. “However, the delinquency level has receded since June as bubble-year loans have passed their maturity date and been resolved. Put another, simpler way: fewer loans are defaulting and those that defaulted in recent years are being resolved away (often with losses).”

The relative health of legacy CMBS and newer securitizations also extends to the broader realm of loans in special servicing. Less than 1% of the Fitch-rated CMBS 2.0 universe was in special servicing as November ended, in contrast, nearly $13 billion, or about 51% of the Fitch-rated universe of outstanding CMBS 1.0 loans, was with the special servicer.

Among Fitch-rated CMBS, November's largest resolution was a $265 million interest-only CMBS loan back by 400 Atlantic St., a 527,424 square-foot office property in Stamford, CT. That resolution contributed to a 58-bp decline in the office delinquency rate to 5.18%, the biggest improvement among any property sector.

However, even as the overall delinquency rate declined, November didn't see improvement across the board. Both Trepp and Fitch note that there were winners and losers among the major property types last month.

Trepp data show that hotels and retails saw increases in their delinquency rates during November, with increases of 21 bps to 3.63% for hotels and 32 bps to 6.79% for retail. For retail, the increase followed three consecutive months of improvements. Fitch-rated hotel CMBS saw an 18-bp increase in delinquencies to 2.9%.

Instant Insights /

CMBS Late-Pays Mark 5th Monthly Decline

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