The Mortgage Industry

Trepp: CMBS Delinquencies Hit Record High Despite Market Optimism

Posted on Tuesday, January 11, 2011

The delinquency rate for loans held in commercial mortgage-backed securities (CMBS) rose again in December with the percentage of loans 30 or more days delinquent, in foreclosure, or REO climbing 27 basis points to 9.20 percent, according to data released this week by Trepp LLC.
The New York-based research and tracking firm says it’s the highest delinquency rate in history for U.S. commercial real estate loans in CMBS. The value of delinquent loans now exceeds $61.5 billion.
Trepp says the decline in the delinquency rate recorded in October 2010 now appears to have been a blip. The rate has since increased by 62 basis points. In November, the company reported a rise of 35 basis points.
December’s 27 basis point jump comes despite the fact that new issues continued to make their way into the calculation and servicers continued to resolve troubled loans. However, Trepp says the new deals – which theoretically should have low delinquencies for a while – will continue to put downward pressure on the delinquency rate as issuance grows in 2011. Similarly, the resolution of troubled loans should also help to lower the rate.
“Many have speculated that between the emergence of new CMBS lending, the resolution of many troubled CMBS loans and an uptick in trophy property sales, that the commercial real estate crisis was nearing its final stages,” said Manus Clancy, managing director for Trepp. “The December delinquency rate underscored that there still may be some nasty surprises in store even as the market shows some signs of healing.”
Based on Trepp’s analysis, multifamily remains the worst-performing property type with a delinquency rate of 16.48 percent, even as industrial delinquencies spiked last month. The delinquency rate for loans on industrial properties hit 8.97 percent in December, up 233 basis points from 6.64 percent the month before.
The hotel sector registered a delinquency rate of 14.31 percent in December, retail space carried a rate of 7.86 percent, and delinquencies on CMBS loans for office space were 6.93 percent.
DS News, By: Carrie Bay


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