Trepp: Delinquency rates drop for commercial real estate loans

PROVIDENCE – Commercial banks should be glad to read the latest data from Trepp LLC, a New York-based firm that does research relating to commercial mortgage-backed securities.

Trepp found the overall delinquency rate for U.S. commercial real estate loans dropped to 3.8 percent in July, down 14 basis points from June and down a whopping 168 basis points from a year earlier.

Overall, the firm said, commercial property loan delinquency rates have now plunged more than 1 percent since the start of the year, setting another post-Great Recession low in July.

The firm also reported loan delinquent rates, or those with payments overdue by at least 30 days, for most types of commercial property continued to fall in July:

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  • The delinquency rate for industrial properties decreased to 4.2 percent last month, down from 4.7 percent in June and down from 7 percent in July 2017.
  • The delinquency rate for lodging properties decreased to 2.35 percent last month, down from 2.32 percent in June and down from 3.7 percent in July 2017.
  • The delinquency rate for office properties decreased to 4.4 percent last month, down from 4.7 percent in June and down from 7.2 percent in July 2017.
  • The delinquency rate for retail properties decreased to 5.6 percent last month, down from 5.8 percent in June and down from 6.6 percent in July 2017.

The only category that saw a month-to-month increase was multifamily properties, which had a delinquency rate of 2.4 percent in July, up from 2.3 percent in June, but down from 2.9 percent in July 2017.

“For the first time since December 2015, apartment loans no longer have the lowest delinquency rate,” Trepp said. “The lodging sector now claims that distinction.”

Scott Blake is a PBN staff writer. Email him at Blake@pbn.com.