Report: Percentage of CMBS Loans Paying Off at Balloon Holds Steady

The percentage of commercial mortgage-backed securities (CMBS) loans paying off on their balloon date held steady last month according to the Trepp February payoff report. Overall, 38.4% of the loans reaching their balloon date paid off in February, Trepp noted Tuesday.

In January, the level was almost identical at 38.7%. Over the last 12 months, the average percentage of loans by balance paying off each month has been 35.8%.

But the news is not all positive. Earlier this month, Trepp, a provider of CMBS and commercial mortgage information, reported that the CMBS delinquency rate rose again in February with the percentage of loans 30 or more days delinquent, in foreclosure or real estate owned (REO) climbed 5 basis points to 9.39%, the highest in history for U.S. commercial real estate loans in CMBS.

However, the increase is one of the smallest month-over-month rises since the beginning of the credit crisis more than two years ago. The value of delinquent loans now exceeds $61.8 billion, according to Trepp.

The industrial, office and retail sectors boosted the overall delinquency rate in February by 32, 22 and 9 basis points respectively, Trepp reports. The multifamily sector did better, improving by 24 basis points, while the lodging sector improved by 47 basis points. Still, they remained the two worst performing sectors with delinquency rates of 16.6% and 14.61% respectively.

“The faith that investors have shown in the legacy U.S. CMBS market over the last few months was validated in February as the overall delinquency rate had one of its smallest increases in nearly two years,” said Manus Clancy, managing director of Trepp, LLC. “While we expect the delinquency rate to continue to climb slightly higher, this may be the first real sign that the peak is near.”

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