Marking the sixth straight monthly decline, the Trepp CMBS delinquency rate dropped sharply in December. The delinquency rate for U.S. commercial real estate loans in CMBS is now 4.89%, down 29 basis points from the November level. That is the lowest reading since September 2016. One year ago, the overall 30-day delinquency rate was 5.23%. The delinquency rate had been climbing consistently for more than a year as loans issued in 2006 and 2007 reached their maturity dates and were not paid off via refinancing. In the 16 months between March 2016 and June 2017, the delinquency rate moved up 13 times. However, now that the dreaded “wave of maturities” has passed, delinquency levels have receded as well.
Delinquency reached a multi-year low of 4.15% in February 2016. The all-time high was 10.34% in July 2012.
In the beginning of summer 2017, Trepp noted that further rate declines were possible in the following months as the Wall of Maturities passed. Delinquencies have now fallen in each of the last six months, and further reductions could occur for 2018.
Delinquency by Property Type, December 2017
| Sector | December 2017 |
December 2016 |
BP Change |
|---|---|---|---|
| Industrial | 5.30% | 5.46% | -16 |
| Lodging | 3.01% | 3.10% | -10 |
| Multifamily | 2.98% | 2.00% | -2 |
| Office | 5.69% | 6.66% | -93 |
| Retail | 5.82% | 6.09% | -8 |
