Retail surpasses office as best performer in CMBS market

August 02, 2011 02:54PM

Much of the positive momentum in the nation’s commercial mortgage-backed securities market seemed to have vanished in July, Trepp says in a monthly report, with the nationwide delinquency rate spiking to 9.88 percent, an increase of 51 basis points from June.

For much of the spring, the CMBS market had been experiencing an upswing. There was a greater rate of loan issuance, troubled loan resolution and drop in delinquency rates. The sudden shift may be attributed to a technical change in the manner in which some servicers report their data, Trepp said, but widening CMBS spreads and an announcement by Standard & Poor’s that it was pulling a rating last week may have made issuers more tentative in their approach to new lending.

Lodging, apartment and office sector readings were all off sharply, the report shows, with retail surpassing office as the best performing major property type. Office delinquency rates were up 62 base points, cracking 8 percent for the first time; hotel delinquency increased by 117 basis points to 15.04 percent; and industrial delinquency fell 59 basis points to 11.09 percent. Multi-family and retail delinquencies both moved up to 16.94 percent and 7.85 percent respectively, with multi-family remaining the worst-performing property type. — Katherine Clarke