NEW YORK, Oct. 2, 2012 /PRNewswire/ — Trepp, LLC, the leading provider of information, analytics and technology to the CMBS, commercial real estate and banking markets, released its September 2012 U.S. CMBS Delinquency Report today (available at http://www.trepp.com/knowledge/research).
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The delinquency rate for U.S. commercial real estate loans in CMBS fell 14 basis points to 9.99% in September. This brings the rate below 10% for the first time since April. This month's improvement followed a notable 21 basis point drop in August, the largest one-month drop since November 2011.
Loan resolutions remained elevated in September, with over $1.77 billion in loans resolved with losses. September's total was up from $1.5 billion in August. The removal of these loans from the delinquent loan category helped drive the delinquency rate down. Loans that cured in September put additional downward pressure on the rate, providing the same effect this month that they did in August.
On the other hand, there were around $3.3 billion of newly delinquent loans in September. The addition of these loans to the delinquent loan category provided upward pressure on the rate. With the same amount of newly delinquent loans in August, the effect on the rate was similar.
"The CMBS market is on its firmest footing in four years," said Manus Clancy, senior managing director of Trepp. "Just this month, spreads fell precipitously, predictions for new CMBS issuance levels rose, and now delinquency levels have contracted. This is great news for the industry."
According to the Trepp report, the appetite for distressed real estate remains high while borrowing costs remain extremely low. This should allow special servicers to operate at a high speed for the foreseeable future. The CMBS new issuance market has also seen a resurgence over the last three months, leading the market to raise its expectations for securitization volume over the next six months. As new deals tend to perform extremely well, they should help to dilute the bad legacy loans that still exist.
Finally, fewer loans will come due over the next year relative to what has been seen recently. This will make maturity defaults somewhat less of a concern than they have been for the past year.
Among the major property types, the lodging and multifamily segments saw the biggest improvements in September. Office, retail, and industrial loans saw only modest movement in their rates when compared to rate changes in August.
For additional details, request the September U.S. CMBS Delinquency Report at http://www.trepp.com. For daily CMBS and bank trading ideas, credit events and commentary, register for TreppWire or follow us on Twitter.
About Trepp, LLC
Trepp, LLC is the leading provider of information, analytics and technology to the CMBS, commercial real estate and banking markets. Trepp provides primary and secondary market participants with the tools and insight they need to increase their operational efficiencies, information transparency and investment performance. For more information visit www.trepp.com.
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