Trepp headquarters in New York City; the firm reports December late-pay increases in some sectors and decreases in others.NEW YORK CITY—Erasing all of the gains registered in early 2016, the CMBS delinquency rate climbed 20 basis points last month to 5.23%, the highest level since October 2015, according to Trepp LLC. The late-pay rate has now moved higher in nine of the past 10 months.
“With a cascade of loans from the 2007 vintage coming due in 2017, it is hard to see the rate going down any time in the near future,” according to Trepp. “Many of the stronger performing loans from 2006 and ‘07 were either defeased prior to maturity or paid off during their open period. Those that make it to their maturity date tend to be loans with more middling debt service coverage or uncertainty in their rent rolls.”
The year just past saw CMBS delinquencies reach a multi-year low of 4.15% in February, due largely to the resolution of the $3-billion Peter Cooper Village/Stuyvesant Town securitization. Since then, though, the rate has climbed steadily as ’06- and ’07-vintage loans have reached their maturity dates and haven’t been paid off via refinancing. That being said, the increases haven’t been nearly enough to bring the delinquency rate to anywhere near its historic high of 10.34% in July 2012.
By sector, the biggest gainer—or loser, as the case may be—was office, where late-pays on CMBS loans jumped by 56 bps during December to 7.13%. Office delinquencies have increased 134 bps year over year, for the biggest increase by property type during the year.
Retail delinquencies added 19 bps during December to reach 6.37%. The sector has added 61 bps of late-pays over the past year.
A year ago, hotel CMBS had the lowest delinquency rate, but with a 75-bp increase year over year, that’s no longer the case. However, hotel late-pays dropped six bps to 3.57% in December.
The current best-performing sector, multifamily, has shed 556 bps of delinquencies over the past year. For December, apartment late-pays rose 22 bps to 2.72%. Industrial delinquencies dropped six bps to 5.62% last month, representing an 11-bp improvement on a Y-O-Y basis.
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Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group’s offices in New York City.