U.S. office and industrial loan delinquency rates worsen

June 01, 2011 01:19PM

Office and industrial loan delinquency rates are continuing to worsen as figures improve for all other major property types, according to the May U.S. CMBS Delinquency Report released today by Trepp.

The U.S. commericial mortgage-backed security delinquency rate fell slightly in May with the percentage of loans 30 or more days delinquent, in foreclosure or real-estate owned declining 5 basis points to 9.6 percent. Although relatively small, the decline is actually the biggest rate drop for commercial real estate loans in CMBS in two years, the report reveals.

“Last month, the delinquency rate posted its biggest rate of increase since late 2010 — a 23 basis point jump,” said Manus Clancy, managing director of Trepp. “The increase took many CMBS pros by surprise as it came after three consecutive months of improving results.”

At the end of May, 9.6% of all CMBS loans were delinquent, Trepp said, down slightly from 9.65% in April, which had been a record high.

“While there may be additional bumps along the way,” Clancy added, “we think the May numbers accurately reflect a leveling off in the market.”

The industrial delinquency rate spiked 120 basis points this month, boosting the rate to almost 12 percent. Six months ago, the rate was less than 7 percent. TRD