CMBS takes a beating as delinquencies reach record high
Commercial mortgage-backed securities delinquencies hit a record high, as the cumulative total jumped 20 basis points. According to a securitization report by Barclays Capital, 9.1% of all CMBS loans were 60 days or more delinquent as of Jan. 31. Data analytics firm Trepp also reported CMBS delinquencies on the rise. The firm said loans 30-days delinquent hit a record high in January at 9.34%. The multifamily sector was up 120 bps to a 15.8% delinquency rate, according to Barclays Capital. Industrial delinquencies increased the most month-over-month yet still remained below multifamily, up to 8.9% from 6.3%. In the lodging sector, 17% of CMBS are delinquent, Barclays said. "While the rate continues to head higher, optimists can point to the fact that the rate of increase is significantly smaller than it was in the prior two months," said Manus Clancy, managing director of Trepp. "Pessimists can counter that the jump comes despite the fact that new issues continue to make their way into the calculation and servicers continue to resolve troubled loans." Barclays reported that by vintage, the most substantial delinquency increase was recorded for 2001 and 2000 vintages (140bps and 60bps, respectively), as more loans are maturing and turn delinquent. The later vintages, 2006 and 2007, also posted gains in the 60 days category at 30bps and 50bps, respectively. In line with Barclays' expectations, liquidations increased during the first month of the year. The firm said high loss severity liquidations spiked 16% to $1.3 billion between December and January. Low-loss severity liquidations totaled $238.4 million and zero –loss liquidations totaled $353.6 million. "Thus, the overall liquidations posted a very high level at $1.9 billion," Barclays said. The market for CMBS is expected to strengthen in 2011 as industry analysts claim it hit bottom in 2010. Moody's Investors Service said last week it anticipates a total of $37 billion in CMBS to be originated this year, with at least $13 billion in the first quarter. In 2010, less than $25 billion CMBS made it to market. Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.