2010 CMBS Modifications Outnumber the Last 2 Years Combined: Trepp

As delinquency increases begin to slow, modifications on CMBS loans are accelerating, according to the analytics firm, Trepp. Further, halfway through 2010, modifications have already passed the amount done in 2008 and 2009 combined. The rate of modifications is set to triple the rate in 2009. In the first seven months of 2010, there have been modifications done on $12.1bn worth of CMBS loans, a 37% increase from the $8.8bn done in all of 2009 and more than four times the $354m modified in 2008, according to Trepp. The percentage of loans backing commercial mortgage-backed securities (CMBS) that have fallen delinquent by 30 days or more increased to 8.7% in July, a new record and an increase from 8.5% in the previous month. The delinquency rate has increased every month this year and is up from 3.7% in July 2009. However, the increases are beginning to slow. The 12 basis point bump in July came after a 17bps increase in June, which followed a 40bps hike in May. Since September 2009, the increase in delinquencies has averaged 37bps every month. Lenders and special servicers are moving more commercial loans through the REO process, which is also putting downward pressure on delinquency rates. The amount of loans either 60-plus days delinquent, in foreclosure or in the REO process reached 7.95% in July, up 12bps from June. Broken down by category, hotels had the highest 30-plus day delinquency rate at 18.4% in July. It’s a 60bps fall from June but still up from 4.7% in July of last year. Multifamily properties held at 14% from last month. Office and retail loans both increased from June, up to 6.3% and 6.9% respectively. “The rate of increase in the delinquency rate for commercial real estate loans in commercial mortgage-backed securities (CMBS) showed more signs of moderating in July,” according to the report. “In June, the increase in the delinquency rate was the smallest in about a year.” Write to Jon Prior.

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