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Hotels Help Reduce CMBS Delinquency

Mortgage News

An improvement in the performance of hotel loans led an overall decline in delinquency on securitized commercial real estate loans. The news, however, wasn’t so good for industrial property lenders.

The rate of 30-day delinquency on loans included in commercial mortgage-backed securities was 8.288 percent during August. Late payments on CMBS loans improved from July, when the rate was 8.449 percent.

But the level of past-due payments has deteriorated from August 2011, when just 8.064 percent of CMBS loans were delinquent.

Morningstar Research, which provided the data, sees the possibility of delinquency reaching 9 percent going into 2013 because take-out financing might not be readily available as many of the loans face upcoming balloon maturities. The ratings agency is also concerned that special servicers will deny requests for extensions, modifications and debt restructuring. Another concern is the decision by borrowers to surrender the collateral.

With a 30-basis-point decline from July, hotel loan delinquency had the biggest drop and finished August with an 11.0 percent rate.

Past-due payments on office property loans fell to 10.1 percent from 10.3 percent, and a 20-basis-point improvement was also recorded for multifamily loans, which ended last month at 6.4 percent.

Delinquency on mortgages secured by retail properties increased 10 BPS to 7.7 percent in August.

The highest rate of delinquency was with industrial properties, with the rate jumping to 11.1 percent from 10.7 percent in July.

The report indicated that on a dollar basis, a total of $58.59 billion in CMBS loans were delinquent last month, less than the $60.06 billion in past-due commercial mortgages in July. A year earlier, $58.92 billion in securitized CRE loans were delinquent.

Morningstar rated a total of $706.95 billion in CMBS as of last month, less than the $710.82 billion in securities it rated as of July and the $730.7 billion in rated securities during the same month last year. Total outstandings include Canadian portfolios.

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