December CMBS Delinquency Rate Fell to 3.11 Percent

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Recent reports from research firm Trepp and ratings agency Fitch show that CMBS delinquencies noticeably improved at the end of 2018. In December, the most recent period for which data is available, the 30+ day delinquency rate for all commercial property types dropped to 3.11 percent, Trepp reports—a 22-basis-point decrease from November and a 178-basis-point decrease year-over-year.

Fitch Ratings researchers estimate that the average CMBS delinquency rate stood at 2.19 percent at year-end 2018—17 basis points below November and 103 basis points below December 2018. The figure represents the lowest delinquency rate recorded since May 2009, Fitch estimates.

Trepp previously forecast the overall U.S. CMBS delinquency rate to fall below 3.0 percent by year-end 2018. “Although it didn’t quite drop that low, it certainly came close. Looking ahead to 2019, we expect the delinquency rate to continue to compress during, at least, the first half of the year,” Trepp researchers wrote in the report.

The delinquency rate fell for all core commercial real estate types, including retail. CMBS loans backed by retail properties still registered the highest delinquency rate overall, at 5.21 percent, but the figure was 9 basis points below November’s delinquency level.

CMBS loans backed by lodging properties registered the lowest overall delinquency rate, at 1.51 percent, a 42-basis-point improvement over November’s figure.

Loans backed by industrial properties, meanwhile, posted the biggest month-to-month decrease in delinquency rates, declining 61 basis points to 2.39 percent.

The delinquency rate for multifamily-backed loans, which was already low at 2.04 percent, went down six basis points to 1.98 percent, and the delinquency rate for office-backed loans declined 38 basis points, to 3.45 percent.

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