September 2, 2011

Trepp released its August 2011 U.S. CMBS Delinquency Report.

The CMBS market rebounded nicely in August after a bleak July delinquency reading. The delinquency rate for U.S. commercial real estate loans in CMBS fell 36 basis points in August to 9.52 percent. This is the second largest drop since the beginning of the credit crisis and the third time the rate has dropped in the past four months. The value of delinquent loans is now $59.8 billion.

“As with July, a big part of the change in the rate was the result of the way some special servicers have been reporting data,” said Manus Clancy, managing director of Trepp. In July, special servicers had started to flag many "dual-tracked loans," those in which the special servicer was pursing both a modification and a foreclosure strategy, as having a workout code of "in foreclosure." This caused the rate to spike sharply in July.

In August, however, the special servicer walked back many of these reclassifications, which put some downward pressure on the rate.

While the delinquency rate for the industrial sector jumped 15 basis points to 11.24 percent, all other major property types remained flat or improved. The multifamily sector remains the market’s worst property type, down 50 basis points from July to 16.44 percent. The hotel delinquency rate improved, falling 128 basis points, now at 13.76 percent. The office delinquency rate remained unchanged at 8.17 percent and the retail delinquency rate dropped 47 basis points to 7.38 percent to remain the best performing major property type.