CMBS delinquency rates differ in two surveys
The delinquency rate on loans backing commercial mortgage-backed securities was 8.58% in October, a 47 basis point drop from the new records in September, and the first monthly decline in over a year, according to analytics firm Trepp. However, analysts at Deutsche Bank say CMBS delinquency rates are stable at 8.85% in their weekly outlook report due to the liquidation of some large commercial real estate loans recently. "The most prominent example was the 2007 vintage Extended Stay Portfolio loan, which had its balance reduced to zero in October and was previously listed as 90-days delinquent," they write. "The removal of that loan from the CMBS legacy universe accounted for approximately a 50 bp reduction in the delinquency rate." Trepp defines the delinquency rate as the amount of commercial loans in foreclosure, REO or 30-plus days delinquent. In October, the value of these loans totaled $58.3 billion, and while it is an improvement from September, the rate is nearly double the 4.8% measured in October 2009. Manus Clancy, managing director at Trepp said loan refinancing, note sales and liquidations pushed the delinquency rate down. The biggest driver in October was the final resolutions of an Extended Stay Hotels loan, which accounted for 59 bps in delinquency reduction. "We anticipate that once the Stuyvesant Town loan is resolved, there will be another 40 basis points worth of delinquencies removed in one fell swoop," Clancy said. Write to Jon Prior.