New CMBS Projections Push 2010 Delinquencies into Double Digits
In February 2010, the delinquency rate among commercial mortgage-backed securities (CMBS) pools reached 6%, up from 5.7% in January and, according to the analytics firm Realpoint, could be possibly heading toward 11-to-12% by the end of the year. Realpoint tracked delinquency data on $797bn of CMBS pools for the report. The total delinquent unpaid balance for CMBS increased $1.8bn in February, up to $47.8bn. It’s an almost 300% increase from one-year ago when $11.9bn was reported for February 2009 and is now 21 times more than the trough of $2.2bn in March 2007. The distressed 90-plus day, foreclosure and real estate owned (REO) aggregate pool grew for the 26th straight month to $36.3bn, up by $2.8bn from January and $29.3bn - or 420% - from February 2009. But in the coming year, the numbers could get worse. Based upon updated trends, Realpoint projects the delinquency rate to reach between 8-and-9% through 2010. If the market is stressed even further, then it could potentially grow to 11-or-12%. Realpoint pointed to two major problematic properties dragging down performance in various CMBS pools. The $4.1bn Extended Stay Hotel loan remained 90-plus days delinquency in February 2010 and should continue in the near-term until a modification or restructuring agreement is reached, according to Realpoint. The $3bn Peter Cooper Village/Stuyvesant Town loan remained current in payments in February 2010. After the borrower did not receive a forbearance, the January payment was missed for Stuyvesant Town, triggering a default. All funds from reserves and escrows were applied to the debt and eventually became depleted. The property should be reported delinquent in April 2010, according to Realpoint. Realpoint now expects the delinquent unpaid CMBS balance to continue on its upward trend and even reach between $60bn and $70bn by the middle of 2010. Write to Jon Prior.