Posted on Sunday, March 20, 2011
The delinquency rate on loans included in commercial mortgage-backed securities (CMBS) conduit and fusion transactions increased 17 basis points in February to 9.18 percent, according to Moody’s Investors Service.
Moody’s noted that while still rising, increases in CMBS delinquencies have been moderating since June 2010.
“As the specially serviced loan rate is 3.3 percent above the delinquent loan rate, this signals that further increases in the delinquency rate are to be expected,” said Tad Philipp, director of commercial real estate research at Moody’s.
Moody’s Delinquency Tracker (DQT) tracks all loans in U.S. conduit and fusion deals issued in 1998 or later with a current balance greater than zero. As the year goes on, the New York-based agency expects the addition of new loans to the Tracker to suppress the delinquency rate. All current, the new loans will add to the loan total, lowering the percentage that are delinquent through what is called the “denominator effect,” Moody’s explained.
During February loans totaling $4.1 billion became newly delinquent, while previously delinquent loans totaling approximately $3.0 billion became current, worked out, or liquidated.
In all, the total number of delinquent loans increased to 4,112 in February from 4,052 in January, and the total
balance of delinquent loans increased to $56.8 billion from $55.7 billion.
Looking at the five property types, the delinquency rate for hotels fell for just the third time in two years in February. During the month, the sector’s delinquency rate dropped 34 basis points to 16.41 percent.
In February only 20 hotel loans totaling $333 million were newly delinquent, while over $500 million in hotel loans became current, were worked out, or disposed.
Increasing 33 basis points during February to 15.92 percent, the delinquency rate of the multifamily sector edged closer to that of the hotel sector. During February 68 multifamily loans totaling $665 million became newly delinquent, while 61 loans, totaling $447 million, became current.
The industrial sector saw the greatest gain in its delinquency rate last month, which increased 113 basis points to 10.26 percent. A total of $399 million of industrial loans became delinquent during the month, while $74 million moved out of the delinquent bucket.
Retail was the only property type other than hotels to record a decline in its delinquency rate in February, as the rate dropped two basis points to 7.25 percent. Office loans remain the best performing of the five property types, although the office loan delinquency rate grew 34 basis points during February to 6.77 percent.
By region, the East saw the biggest increase in its delinquency rate in February. Three of the four biggest newly delinquent loans were in the eastern part of the country.
By state, Montana saw a dramatic 482 basis point climb in its delinquency rate to 7.87 percent. Moody’s points out that the large increase resulted solely from one newly delinquent loan because Montana contributes such a small number of loans to the DQT.
Nevada continues to have a nearly 30 percent delinquency rate, close to twice as high as any other state.
By: Carrie Bay, DS NEWS