Wednesday, March 31, 2010

CMBS Delinquency Rate Sets Record Once Again

The delinquency rate for CMBS loans stepped up sharply March. After February's report there was guarded optimism as the increase showed signs of moderating. February's increase had been the smallest bump in nine months.

March data threw cold water on any notion that CMBS delinquencies might be nearing their peak, however.

Overall, the percentage of loans 30 or more days delinquent or in foreclosure or REO jumped 89 basis points - the highest increase since the summer of 2009. The positive spin on that number can be that it is inflated by about 40 basis points by the fact that the $3 billion Stuyvesant Town loan in Manhattan is now considered "in foreclosure."

But even after subtracting out the Stuyvesant Town impact, delinquencies were still up 49 basis points. That's more than twice the rate of increase in February and still the biggest adjusted spike since last summer.

The Numbers

  • Delinquencies race past 7% level - Jump 89 basis points
  • % of Loan 30 or more days delinquent or in foreclosure - March: 7.61% February: 6.72% January: 6.49%
  • Delinquency level of 7.61% is once again the highest in history of CMBS industry
  • Increase of 89 basis points is largest increase since mid-2009 (when numbers were GGP inflated)
  • NYC's Stuyvesant Town moving to the "foreclosure" category contributed to huge spike in March.
  • Stuyvesant Town contributed 40 basis points to the 89 basis point increase.
  • The 49 basis increase is the largest since June 2009 after adjusting for Stuyvesant Town and Extended Stay Hotels.
  • Percentage of loans seriously delinquent (60+, In foreclosure, REO, or non-performing balloons) at 6.66% - up 69 basis points

Historical Perspective

One year ago, the delinquency rate was under 2%.

Since March 2009, delinquency rate up almost 400%.

The increase of 49 basis points in March is the largest increase since mid 2009

All Major Property Types Weaker

  • Multifamily rate up 332 BPs in March - rate now 13.19%
  • Without Stuyvesant Town, Multifamily rate at 10.49% - up 75 BPs.
  • Hotel delinquencies up 124 BPs in March - rate nears 17%
  • Industrial rate cracks 5% level - up 64 BPs
  • Office rate remains lowest of major property type at 4.73% -- up 40 BPs in March
  • Retail rate up 29 BPs - now over 6%

Source: Trepp Wire