CMBS delinquencies rise slightly

Commercial mortgage-backed securities levels rose recently.

The level of delinquencies for loans in commercial mortgage-backed securities rose slightly in November after a few months of declines.

Overall loans in commercial mortgage-backed securities had a delinquency rate of 9.71 during the month of November, according to a report from Trepp. This was a slight increase of two basis points from the previous month's figure. Previous to this decline, the figure rose 65 basis points from July to October. July's figure was 10.34 percent, which was the highest level ever recorded.

The most significant increase in November when examining commercial real estate sectors was the lodging market. The report explained that property management companies with interests in that sector witnessed CMBS delinquency levels rise 100 basis points, while office properties saw the same level increase slightly. The CMBS delinquency rate dropped for all other sectors, including industrial, retail and apartments.

"The market cooled off somewhat in November," said Manus Clancy, senior managing director of Trepp. "After months of seeing spreads plummet and delinquency rates fall, both inched up in November. Despite the time-out, CMBS continues to be issued as a feverish rate – so the enthusiasm for the asset class remains high."

Newly delinquent loans were the main culprit for the increase, as approximately $3.7 billion were in this category, which was much higher than the $2.6 billion recorded in October, according to Trepp. However, loan resolutions performed well during the month. November experienced close to $1.7 billion in resolutions, and cut the newly delinquent loan level in half.

The report added that loan resolutions should continue at high levels in the next several months, while borrowing costs will remain deflated.

Specially serviced CMBS level declines in Q3
The level of CMBS loans in a state of special servicing dropped during the third quarter, according to a report from Fitch Ratings.

In total, the level last quarter was $74.8 billion, which was $6 billion lower than during the previous quarter. This figure was far below the cyclical peak, as it was $91.7 billion two years ago, the report explained. There may be a continued decline, or relative stability in the CMBS levels in special servicing, but this may not last long. This is due to the market on the verge of getting a significant number of loans mature between 2015 and 2017.

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