CMBS Delinquencies Surpass $60B
Aug 2, 2010 12:51 PM, By David Bodamer
CMBS delinquencies rose again in recent months, according to reports from Trepp LLC and Realpoint LLC, two research firms tracking the sector. Total delinquencies now amount to more than $60 billion, according to Realpoint.
In June, the delinquent unpaid balance for CMBS rose $3.11 billion, up to $60.45 billion from $57.34 billion a month prior, according to Horsham, Pa.-based Realpoint.
Overall, the delinquent unpaid balance is up 111 percent from a year ago and is now more than 27 times the low point of $2.21 billion in March 2007. The distressed 90+-day, foreclosure and REO categories grew in aggregate for the 30th straight month—up by $2.0 billion from the previous month. The total unpaid balance for CMBS pools reviewed by Realpoint for the June remittance was $784.9 billion down from $788.7 billion in May.
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The delinquency ratio for June of 7.70 percent (up from the 7.27 percent reported for May) is more than two times the 3.50 percent reported in June 2009 and more than 27 times the Realpoint recorded low point of 0.28 percent in June 2007.
Realpoint maintained its projection for the delinquent unpaid CMBS balance, which it expects to reach between $80 billion and $90 billion by the end of 2010. The firm also projects the delinquency percentage to grow to 11 percent to 12 percent under more heavily stressed scenarios through the end of the year.
By property type, in June, multifamily loans surpassed retail loans as the greatest contributor to overall CMBS delinquency. Retail loans had been the greatest contributor for sixth straight months prior to June. Delinquent multifamily loans account for 2.0 percent of the CMBS universe and 25.9 percent of total delinquency. The retail default rate decreased slightly to 6.4 percent, down from 6.5 percent in May and up from 5.2 percent one year ago. Realpoint expects retail delinquencies to continue to increase throughout 2010.
Meanwhile, in its monthly report, Trepp said that the CMBS delinquency rate had reached a record 8.71 percent in July, up from 8.59 percent in May. The 12 basis point increase was the smallest Trepp has recorded since July 2009 and followed another small increase of 17 basis points in June. The delinquency rate one year ago was 3.71 percent. Prior to the last two reports, delinquencies in the eight months prior rose between 37 and 49 basis points per month. The lone exception was this past February where the rate jumped by just 23 basis points.
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