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June CMBS delinquencies fall to 9.37 percent.

June delinquency rates for commercial mortgage-backed securities fell 23 basis points to 9.37 percent-the second consecutive monthly drop since 2008, according to Trepp LLC, New York.

One year ago, overall U.S. CMBS delinquencies were 8.59 percent before moving up to 9.2 percent six months ago. By April, CMBS at least 30 days delinquent or in foreclosure peaked at 9.65 percent. The CMBS delinquency rate fell to its lowest level since February 2011 after edging down 5 basis points in May.

"After a modest reduction in May, the delinquency rate fell sharply in June," said Marcus Clancy, managing director at Trepp. "Unfortunately, the rate reduction was driven primarily by a sharp spike in loans being resolved with losses, rather than delinquent loans actually curing."

Nearly $1.8 billion of CMBS loans liquidated in June- the highest loss resolution volume since Trepp started measuring loss resolutions 18 months ago. "The elimination of these troubled loans from the pool reduced the delinquency rate by about 28 basis points. The remaining loans in the index actually saw delinquencies rise about 5 basis points, leading to a net reduction of 23 basis points overall," Clancy said.

Seriously delinquent loans-60 or more days delinquent, in foreclosure, real estate-owned (REO) or non-per-forming balloons-is 8.75 percent for June, down 21 basis points from May. Seriously delinquent U.S. CMBS loans were at 7.83 percent one year ago and then jumped 50 basis points to 8.33 percent six months later.

CMBS delinquencies fell for all property types except office properties, up 12 basis points to 7.35 percent, but office properties performed better than other property types.

The retail CMBS delinquency rate fell 12 basis points, but it remains higher than office at 7.82 percent. Industrial property delinquencies fell 28 basis points after months of sharp increases, but are at 11.68 percent. Lodging delinquency rates plunged 150 basis points but are at 13.87 percent for June. The multifamily delinquency rate fell 23 basis points, and it remains the worst major property type at 16.48 percent.

If June's defeased loans were taken out of the equation, the overall delinquency rate would be 9.85 percent-down 25 basis points from May.
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Title Annotation:Commercial
Comment:June CMBS delinquencies fall to 9.37 percent.(Commercial)
Publication:Mortgage Banking
Date:Aug 1, 2011
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