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Retail CMBS Losses Drop, While Delinquencies Up In October

Shopping mall

Retailers continue to face headwinds and turbulent times, as evidenced by big-box retailers, including JC Penney, Sears, Macy’s and Sports Authority, that continue to shutter stores and downsize their real estate as consumers continue to gravitate online.

In its Retail Sector Snapshot for the month of November, Trepp CRE Research reported new online retailers and food service providers have helped circumvent the negative impact store closures would typically have on CMBS loans, resulting in loans posting an average occupancy of 94.2% in October—representing growth potential for the sector.

Below are three quick retail loan stats coming out of October, according to Trepp CRE Research.

1)  Retail losses and dispositions in October dropped to $2.2B. That’s about half of September’s total, according to Trepp, and loss severity for the past six months continued its downward trajectory, dropping to 45% in October.

2) CMBS retail delinquency in October rose to 6.03%, while the overall CMBS delinquency rate rose to 4.98%. Compared to other major property types, retail loans averaged 37.3% in loss severity, the second-highest average.

3) Looking ahead, loans for 160 retail properties totaling $3.1B are slated to mature next month—this accounts for roughly 41.5% of November’s total maturing balance, including CMBS, single-asset and large loans.