That’s the second biggest decline recorded by the New York-based research firm in 2011, surpassed only by August’s 36 point drop. The rate has now fallen in four of the 11 months of 2011.
The value of delinquent CMBS loans is now $58.5 billion by Trepp’s calculations.
Recent declines in CMBS delinquencies, however, likely aren’t the makings of a trend, according to Trepp’s analysts.
The delinquency rate is expected to rise in coming months as the 2007 vintage loans that were originated under the
weakest underwriting standards start to reach their five-year balloon maturity dates. This will add to the stress that is being put on the delinquency rate by the slow-down in CMBS issuance, Trepp explained.
“It is quite possible that this will represent the best reading for a while,” said Manus Clancy, senior managing director of Trepp. “With the first of the dreaded 2007 vintage loans starting to mature, severe upward pressure will be put on the rate over the next few months.”
Clancy went on to explain, “Even if the 2007 vintage is only ‘as bad’ as the 2006 vintage has been, the rate could easily go up 75 basis points. So for now, further improvements in the delinquency rate could be elusive.”
By property type, the hotel delinquency rate dropped 184 basis points to 12.28 percent during the month of November.
The industrial delinquency rate jumped 61 basis points to 12.20 percent, threatening to pass lodging as the second worst performing property type.
The office delinquency rate was down 19 basis points, to 8.76 percent, while the multifamily delinquency rate dipped 55 basis points to remain the worst performing major property type with a rate of 16.18 percent.
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The retail delinquency rate tightened 9 basis points to 7.52 percent, remaining the best major property type.
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