NEW YORK CITY—The August hiatus in this year's gradual increase in CMBS delinquencies may have been a flash in the pan. September found the Trepp CMBS Delinquency Rate reversing course and resuming a climb that began six months earlier, following a multi-year low.
Trepp LLC said Monday that the delinquency rate for US commercial real estate loans in CMBS is now 4.78%, representing an increase of 10 basis points from August. The rate is now 50 bps lower than the year-ago level and 39 bps lower since the beginning of the year. The September jump represents the sixth time in the past seven months that the rate has increased.
In September, CMBS loans that were previously delinquent but paid off with a loss or at par totaled about $850 million. Removing these previously distressed assets from the numerator of the delinquency calculation helped move the rate down by 17 bps.
Almost $500 million in loans were cured during September, which helped push delinquencies lower by another nine basis points. However, almost $1.3 billion in loans became newly delinquent in September, thereby exerting 28 bps of upward pressure on the delinquency rate. A reduction in the denominator due to the maturation of performing loans accounted for the remainder of the difference.
The reading hit a multi-year low of 4.15% in February 2016. The all-time high as measured by Trepp was 10.34% in July 2012.
By property type, the month represented a mixed bag, with industrial and multifamily seeing declines of 29 and five bps, respectively. Industrial's late-pay rate is now 5.28%, putting it in the middle of the group, while apartment delinquencies declined to 2.33%. Multifamily loans continue to represent the best-performing property type, as they have since the year began, when the resolution of the $3-billion Peter Cooper Village/Stuyvesant Town securitization singlehandedly brought apartments from the highest delinquency rate to the lowest.
Lodging delinquencies increased by 10 bps to 3.25%. Retail CMBS added eight bps of delinquencies to end the month at 5.89%. The biggest monthly swing occurred in the office sector, where delinquencies rose 30 bps to 6.33%.
Separately, Fitch Ratings reported an increase in CMBS loan prepayments during the third quarter, driven by still-low interest rates and the expectation for rates to rise. The ratings agency says it expects the trend to continue into Q4.
Nearly $18.2 billion of loans securitized in peak vintage 2006 and 2007 legacy conduit transactions within the Fitch-rated universe were paid off during Q3. Approximately 73% of these payoffs ($13.2 billion) were loan prepayments, of which 14%, or $2.5 billion, had already been previously defeased. This compares to prepayment percentages of 60% ($7.2 billion) and 50% ($7.7 billion), respectively, in Q1 and Q2 of this year. Q4 will see some $15 billion of scheduled maturities.
The majority of the prepayments ($12.6 billion) occurred during the open period and therefore were made without penalty. A small remainder ($589 million) required a premium or yield maintenance. Open periods generally begin only a few months prior to loan maturity.
The prepayments during the open period included 23 loans totaling $6 billion with an outstanding balance at the time of disposition of $100 million or greater. Fifteen loans (totaling $1 billion) were between $50 million and $100 million; 43 loans ($1.5 billion) were between $25 million and $50 million; 134 loans ($2.1 billion) were between $10 million and $25 million; and 476 loans ($2 billion) were less than $10 million apiece.
More than 300 of the industry's leading national investors, REITs, banks, private equity firms, asset management firms and other institutions will join us as we explore the market conditions behind the trends at this year's RealShare National Investment & Finance, scheduled for Oct. 5 and 6 at the Roosevelt Hotel in New York City. Learn more.
Trepp LLC said Monday that the delinquency rate for US commercial real estate loans in CMBS is now 4.78%, representing an increase of 10 basis points from August. The rate is now 50 bps lower than the year-ago level and 39 bps lower since the beginning of the year. The September jump represents the sixth time in the past seven months that the rate has increased.
In September, CMBS loans that were previously delinquent but paid off with a loss or at par totaled about $850 million. Removing these previously distressed assets from the numerator of the delinquency calculation helped move the rate down by 17 bps.
Almost $500 million in loans were cured during September, which helped push delinquencies lower by another nine basis points. However, almost $1.3 billion in loans became newly delinquent in September, thereby exerting 28 bps of upward pressure on the delinquency rate. A reduction in the denominator due to the maturation of performing loans accounted for the remainder of the difference.
The reading hit a multi-year low of 4.15% in February 2016. The all-time high as measured by Trepp was 10.34% in July 2012.
By property type, the month represented a mixed bag, with industrial and multifamily seeing declines of 29 and five bps, respectively. Industrial's late-pay rate is now 5.28%, putting it in the middle of the group, while apartment delinquencies declined to 2.33%. Multifamily loans continue to represent the best-performing property type, as they have since the year began, when the resolution of the $3-billion Peter Cooper Village/Stuyvesant Town securitization singlehandedly brought apartments from the highest delinquency rate to the lowest.
Lodging delinquencies increased by 10 bps to 3.25%. Retail CMBS added eight bps of delinquencies to end the month at 5.89%. The biggest monthly swing occurred in the office sector, where delinquencies rose 30 bps to 6.33%.
Separately, Fitch Ratings reported an increase in CMBS loan prepayments during the third quarter, driven by still-low interest rates and the expectation for rates to rise. The ratings agency says it expects the trend to continue into Q4.
Nearly $18.2 billion of loans securitized in peak vintage 2006 and 2007 legacy conduit transactions within the Fitch-rated universe were paid off during Q3. Approximately 73% of these payoffs ($13.2 billion) were loan prepayments, of which 14%, or $2.5 billion, had already been previously defeased. This compares to prepayment percentages of 60% ($7.2 billion) and 50% ($7.7 billion), respectively, in Q1 and Q2 of this year. Q4 will see some $15 billion of scheduled maturities.
The majority of the prepayments ($12.6 billion) occurred during the open period and therefore were made without penalty. A small remainder ($589 million) required a premium or yield maintenance. Open periods generally begin only a few months prior to loan maturity.
The prepayments during the open period included 23 loans totaling $6 billion with an outstanding balance at the time of disposition of $100 million or greater. Fifteen loans (totaling $1 billion) were between $50 million and $100 million; 43 loans ($1.5 billion) were between $25 million and $50 million; 134 loans ($2.1 billion) were between $10 million and $25 million; and 476 loans ($2 billion) were less than $10 million apiece.
More than 300 of the industry's leading national investors, REITs, banks, private equity firms, asset management firms and other institutions will join us as we explore the market conditions behind the trends at this year's RealShare National Investment & Finance, scheduled for Oct. 5 and 6 at the Roosevelt Hotel in
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