July CMBS Delinquency Rate Falls to New Post-Crisis Low

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The all-property CMBS delinquency rate fell to a new post-financial crisis low in July, according to both Trepp LLC and ratings agency Fitch. Trepp calculated the 30+ day all-property delinquency rate at 2.62 percent, a 22-basis-point drop from where it was in June. The figure was also down 119 basis points compared to July of 2018.



Meanwhile, Fitch reported that its all-property delinquency rate stood at 1.83 percent for the month—a four-basis-points drop compared to June.

Trepp researchers attribute the steadily declining delinquency rate to the continued resolution of legacy loans.

The lodging sector saw the biggest drop in July’s delinquency rate, according to Trepp, going down 61 basis points to 1.80 percent. Delinquency for office-backed CMBS loans also declined considerably—by 31 basis points, to 2.71 percent.

The industrial sector saw a decline of 24 basis points, to 1.70 percent, and the retail sector posted a delinquency decline of 9 basis points, to 4.35 percent.

Multifamily-backed CMBS loans saw the least improvement in delinquencies during the month, dipping 7 basis points to an already low 2.04 percent.

Fitch reported similar trends for the month among the various property types. The only sector where the CMBS delinquency rose slightly during July was multifamily, which saw a two-basis-point increase to 0.53 percent. The industrial sector saw the biggest drop in delinquency, by 19 basis points to 0.77 percent. This was due to a resolution of a $21.6 million loan and no new delinquencies reported in the sector during the month of July, according to Fitch researchers. Delinquency also went down by 11 basis points for office properties, to 2.37 percent.

Retail and hotel sectors saw more modest drops in CMBS delinquency, by four basis points and three basis points respectively, while the rate stayed flat for mixed-use properties (0.99 percent) and other types of commercial assets (0.84 percent).

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