WASHINGTON, DC—The delinquency rate of CMBS loans on DC-area properties is up year over year, according to Trepp data. Specifically, as of July 2015 it was 5.67% compared to 5.12% in July 2014.
To be sure, some of this is due to defaults and troubled properties, Trepp Research Analyst Sean Barrie tells GlobeSt.com. Just to cite one example: the $14.9 million loan backing 475 School St., a 57,759 square-foot office, was sent to special servicing last month in anticipation of the departure of the lead tenant this month. This loan makes up 1.05% of the collateral behind BSCMS 2007-T28.
But the increase is also a reflection of the decreasing health loan count, he says. "A lot of healthy loans are performing well enough to be resolved or through pay outs," he says. In July 2015 Trepp recorded 846 health loans for the area properties. A year ago, that number was 1,000.
This doesn't mean companies are borrowing less, he adds. Rather, "there is a high volume of loans coming due that need to be resolved. There are, in fact, new loans being issued in the market but because so many loans are maturing these are offsetting the new loans."
The best takeaway from the analysis? "Just the fact that the market is able to digest and pay off those maturing loans is a very good sign," Barrie said.
Meanwhile, as another version of the saying goes, distress happens and will continue to happen no matter the state of the overall cycle or health of the local market.
That $14.9 million loan backing 475 School St.? The dominant tenant in the space is TASC, which occupies 87% of the building, according to Trepp. TASC, which was purchased by Engility for $1.1 billion late last year, has been on Trepp's radar.
According to a recent alert by the company:
Late last year we noted that the $131.25 million Quantico Portfolio note was one to watch. The loan is backed by 14 properties totaling almost one million square feet. The 4801 Stonecroft Blvd. property is a 241,283 square-foot office building that was built in 1998. While the office makes up about 25% of the note's square footage, its allocated balance represents about 42% of the loan balance. The TASC lease at the location ends in December making the loan one to eyeball as the year goes on.
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