CMBS delinquencies continued to drop and fell in January to their lowest level in close to a year, according to data from commercial real estate consulting firm Trepp LLC.
“If the CMBS market was cycling, people would think that someone had been dumping performance-enhancing drugs in the water cooler,” said Manus Clancy, senior managing director with Trepp, in reference to the overall health of the sector.
The delinquency rate for U.S. CMBS dropped 14 basis points in January down to 9.57 percent. It marked the lowest level that the delinquency rate has reached since February 2012, when it was at 9.38 percent.
Delinquencies hit an all-time high in July of 10.36 percent. The downward trend in the rate began in August.
Clancy pointed out that resolutions had a slight uptick in January, as more than $1.2 billion in loans were resolved with losses. The removal of those loans from the delinquency category helped drive the rate down. While $2.8 billion in newly delinquent loans surfaced in January, Trepp noted in its report that the total was less than the $3.2 billion of newly delinquent loans in December.
The retail sector had the lowest delinquency rate for the month, 7.79 percent, while the multifamily delinquency rate remained the highest of the five major property types at 13.43 percent, according to the Trepp data. Industrial and lodging loan delinquencies hovered around 11 percent, and office loans were at 10.48 percent, according to Trepp data.
Clancy said that falling delinquency rates are one of several positive signs for the commercial real estate market. Trepp reported that refinancing activity is expected to pick up the pace in 2013 and will possibly offset some of the downward pressure on the overall delinquency rates by removing some performing loans from the equation. Additionally, the report noted that performing loans past their balloon dates continue to show dramatic improvements over the past six months.