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The Real Deal Miami

A new high for the CMBS delinquency rate

July 03, 2012 03:45PM

Manus Clancy, senior managing director at Trepp

After hitting double digits for the first time ever in May, the delinquency rate for U.S. commercial mortgage-backed securities inched ever higher in June. According to Trepp data cited by the Wall Street Journal, the delinquency rate rose to 10.16 percent in June, and has risen 79 basis points in four consecutive months of increases since February.

The delinquency gains were widely anticipated as more than $200 billion in loans originated at the market’s peak in 2007 came due this year. In total, $76 billion worth of loans are in, or near, default and most haven’t been able to be refinanced — not only because prices were higher in 2007 but also because it was assumed they would continue to grow.

But for the select few loans that show some promise, the Journal said conditions are strong for refinances. “If you have a trophy property in a 24-hour market, you’re in a sweet spot now because (rates) are so low,” said Manus Clancy, a senior managing director at Trepp.

The delinquency rate is expected to decrease from here on out, as many of the 2007 loans have already matured. [WSJ]