Wednesday, April 1, 2015

CMBS Delinquencies Unchanged in March as Loan Liquidations Remain Low

Trepp, LLC, the leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets, released its March 2015 US CMBS Delinquency Report today.

The Trepp CMBS Delinquency Rate was unchanged in March, interrupting the recent string of falling delinquencies. After falling for four consecutive months, the delinquency rate for US commercial real estate loans in CMBS remains 5.58%. The percentage of seriously delinquent loans, defined as those 60+ days delinquent, in foreclosure, REO, or non-performing balloons, fell one basis point to 5.41%.

Almost $1.1 billion in CMBS loans became newly delinquent in March, bringing total delinquencies to $29.4 billion, slightly below the total as of month-end February. Over $800 million loans were cured last month, while $570 million loans that were previously delinquent paid off either at par or with a loss.

The decline in the pace of loan resolutions does not come as a surprise. After a torrid pace in 2012 and 2013, liquidations have slowed for the time being. As the market gets further into the cycle of 2006 and 2007 10-year loans reaching their maturities, Trepp expects liquidation volume numbers to start to pick up again.

"The financial markets were turbulent in March, but the CMBS market remained a sea of tranquility," said Manus Clancy, Senior Managing Director at Trepp. "While market watchers were worried about lower US GDP, an overly strong dollar, and sagging corporate earnings, the CMBS market was as steady as could be. Spreads remained largely unchanged in March, new issuance was solid, CMBS volatility was light, and the delinquency rate was flat. That performance compared to the big whipsaws in US stock prices seemingly each day in March."