Delinquent CMBS Balance Rises 583%

The delinquent unpaid balance within commercial mortgage-backed securities (CMBS) swelled to $31.7bn in September from $28.2bn a month earlier, according to credit-rating agency Realpoint.

This total delinquent balance is up 583% from a year earlier. More than 3.9% of $805.3bn in unpaid balance on CMBS pools reviewed by Realpoint was delinquent in September.

Despite a slight monthly decline in the real estate-owned (REO) bucket due to increased liquidations, the distressed 90 plus-day, foreclosure and REO categories grew in aggregate for the 22nd month in a row, rising $1.48bn over the previous month.

Commercial loan delinquencies continued to climb in October, with the rate of loans 30 plus-days delinquent rising 44bps to 4.8%, according to CMBS and commercial mortgage information provider Trepp.

Fitch Ratings indicated on Monday commercial real estate fundamentals will continue to deteriorate over the next 18 to 24 months, despite broader signs of economic recovery. Negative ratings actions may become necessary as operating cash flows continue to weaken.

Large loan floating-rate transactions, pre-2000 vintage transactions and deals originated in the second half of 2005 will be most susceptible to downgrades, although the magnitude of such downgrades is expected to be less significant than recent actions, according to the rating agency.

Write to Diana Golobay.