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Apartment and Hotel Loans Help CMBS Delinquency Rate

Mortgage News

The rate of delinquency on securitized commercial real estate loans was lower last month, and a big drop in late payments on loans secured by apartment buildings and hotels was responsible for the improved performance.

CRE loans at least 30 days past due as of Jan. 31 that were included in commercial mortgage-backed securities accounted for 9.52 percent of all CMBS loans. That worked out to $57.7 billion in delinquent loans.

CMBS delinquency was reported by Trepp LLC.

The 30-day rate slipped from 9.58 percent as of the end of December, when $58.5 billion in securitized CRE loans were past due.

But CMBS late payments have deteriorated from 9.34 percent as of Jan. 31, 2011.

The New York-based company said that the first wave of CRE balloon loans originated in 2007 matured last month, and only a little more than a quarter were paid off.

However, offsetting the ballooning loans were $1.6 billion in loans that were resolved during January.

Multifamily delinquency was down 18 basis points from December to 15.39 percent last month. But despite the decline, the multifamily rate was the worst of any property type. Multifamily delinquency was 16.84 percent a year earlier.

Industrial delinquency rose 11 BPS from December to 12.14 percent, while lodging loans registered an 11-basis-point decline to finish January at 12.09 percent. Delinquency on office property loans was down 7 BPS to 8.90 percent, while retail property loan delinquency was up 3 BPS to 7.88 percent.

“The CMBS market performance will be dictated by two trends going forward,” Trepp Senior Managing Director Manus Clancy predicted in the report. “The pace of loan liquidations will compete against the growth of delinquent loans that emerge from the class of 2007. If the rate of loan liquidations slows, the rate will climb. If the special servicers keep plowing ahead at the pace they did in January, the rate could manage to stay flat.”

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