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Multifamily, Industrial Mortgage Lates Skyrocket

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While overall quarterly delinquency on securitized commercial real estate loans was lower, delinquency leapt more than 40 basis points on loans secured by apartment buildings and skyrocketed more than 90 BPS on industrial property mortgages.

A report Monday from Moody’s Investors Service indicated that 4,017 securitized commercial mortgages for $56 billion were delinquent in May. That worked out to a 9.18 percent delinquency rate.

Moody’s based its findings on commercial real estate loans included in commercial mortgage-backed securities conduit/fusion transactions.

In April, the rate was higher at 9.22 percent. But delinquency has deteriorated from 7.50 percent a year earlier.

While $3.4 billion in securitized CRE loans became newly delinquent, $4.1 billion in loans were cured — leading to the lower rate.

“We expect a high single-digit or low double-digit delinquency rate to persist over the near term,” Moody’s CRE Research Director Tad Philipp said in the report.

A report Thursday from the Mortgage Bankers Association indicated that $626.2 billion in CRE loans were held in commercial mortgage-backed securities, collateralized-debt obligations and asset-backed securities as of the first quarter, higher than $622.5 billion in the fourth-quarter 2010.

The trade group said that overall CRE outstandings edged down to $2.3776 trillion in the first quarter from $2.381 trillion at the end of last year.

MBA’s report also indicated that agency and GSE portfolios and MBS held another $327.3 billion in CRE loans, while banks and thrifts owned $793.8 billion and life insurance companies owned another $299.4 billion. The rest were owned by a host of other investor types including federal, state and local governments; real estate investment trusts and retirement funds.

Hotel loans had the highest delinquency: 16.35 percent. But that was 3 BPS better than Moody’s reported in April.

Performance on multifamily mortgages fell apart, Moody’s said. Apartment delinquency was 15.76 percent, surging 41 BPS from April.

MBA’s report said that outstanding multifamily loans were $799.6 billion as of the first quarter, up from the fourth quarter’s $796.4 billion.

Also leaping were lates on industrial properties, according to Moody’s. The New York-based ratings agency said industrial delinquency rose 93 BPS to 11.16 percent.

Retail delinquency was down 31 PBS to 7.31 percent, and office-sector loan defaults slipped 2 BPS to 6.87 percent.

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