CMBS Delinquencies Hit All-Time High; Relief on the Horizon via CPExecutive.com

The time has come: The CMBS delinquency rate hit an all-time high in May 2012, surpassing the 10 percent mark as the rate saw its third consecutive month of increases. In May alone, the delinquency rate rose 24 basis points to 10.04 percent but, since March, has risen 67 basis points. Trepp pulled no punches in its report.

“Back in December, we predicted that 2012 could be a rocky year for CMBS in terms of the delinquency rate,” the agency wrote in its May 30, 2012 report. “At the time, the delinquency rate was hovering at 9.51 percent and had stayed in a fairly tight band for a number of months. We wrote that the market could easily see a spike of 70 basis points in the short term, as five-year loans that were securitized in 2007 began to reach their maturity dates.”

That prophecy now appears to be have come true. The CMBS delinquency rate set an all-time high in May. Overall, the delinquency rate for U.S. commercial real estate loans in CMBS jumped 24 basis points in May to 10.04 percent. In the process, the rate broke through the 10 percent threshold for the first time ever. Whether the rate creeping into double digits for the first time carries some psychological impact remains to be seen.

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