After stalling in the first few months of the year, delinquencies on CMBS loans fell 17 basis points in May, to 5.40 percent, reports Trepp LLC, a New York City-based research firm. What’s more, CMBS delinquencies fell in every major property sector, including industrial, hotel, multifamily, office and retail.
The drop in CMBS delinquencies is in line with overall trends in the market, according to a just released report from the Mortgage Bankers Association (MBA), an industry trade group. The MBA reports that in the first quarter, 30+-day loan delinquencies fell for every lender type except Fannie Mae. The delinquency rate for CMBS lenders fell 19 basis points from the fourth quarter of 2014 to the first quarter of 2015, to 5.17 percent. For life insurance companies, the delinquency rate fell 2 basis points, from already low 0.08 percent to 0.06 percent. The delinquency rate for banks and thrifts fell 11 basis points, to 1.03 percent.
The delinquency rate for Freddie Mac loans fell 1 basis point, to 0.03 percent, while the delinquency rate for Fannie Mae loans increased 4 basis points, to 0.09 percent.
Trepp reports that approximately $700 million in CMBS loans were cured during the month, in addition to $1.2 billion in delinquent loans that were paid off. The firm’s researchers note that the 17-basis-point month-over-month decline in the overall delinquency rate was the biggest since November, when the rate fell 34 basis points.
The hotel sector experienced the greatest drop in the CMBS delinquency rate, at 38 basis points, to 3.80 percent. The delinquency rate in the industrial sector went down 33 basis points, to 7.50 percent. In the multifamily sector, the delinquency rate went down 30 basis points, to 8.62 percent. The office sector posted an 18-basis-point drop in delinquency, to 5.93 percent, and the retail sector posted a 2-basis-point improvement, to 5.43 percent.
May also marked a year-over-year increase in monthly CMBS issuance, at $7.7 billion, according to Commercial Mortgage Alert, an industry publication. In May 2014, CMBS shops originated only $5.4 billion in new CMBS loans. According to a May report from J.P. Morgan analysts Meghan C. Kelleher and Chong C. Sin, “The new issue pipeline is back in full swing.”
“The issuance calendar looks robust heading into the summer, with more than $12 billion scheduled to come to market through the end of June.”