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CMBS Delinquency Rate Plunges to Lowest Level in 15 Months
The Trepp CMBS Delinquency Rate fell sharply in December. The final reading of 2017 was the lowest reading since September 2016, and also marked the sixth straight month in which the reading has dropped and further reductions could be in the cards for 2018. The delinquency level has receded since June 2017 as bubble- year loans have passed their maturity date and been resolved.
The delinquency rate for U.S. commercial real estate loans in CMBS is now 4.89%, a decrease of 29 basis points from the November level. That represents the largest monthly dip since January 2016, when several large troubled CMBS loans were resolved, notes Trepp’s Manus Clancy.
More than $800 million in loans became newly delinquent in December, which put 20 basis points of upward pressure on the delinquency rate. Roughly $835 million in loans were cured last month, which reduced the delinquency rate by 20 basis points. Roughly $1.16 billion in previously delinquent CMBS loans were resolved with a loss or at par in December. Those resolutions shaved 28 basis points off the December reading.
Key property sector findings included:
– The retail delinquency rate plunged 66 basis points to 6.13%, and the retail reading finished 24 basis points lower year-over-year.
– The industrial delinquency rate fell 43 basis points to 5.67%. Year-over-year, the industrial reading was up five basis points.
– The office delinquency rate decreased 10 basis points to 6.40%. Year-over-year, the office rate moved down 73 basis points, which represented the greatest improvement of any major property type.
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