The delinquency rate on commercial mortgage-backed securities surpassed 9% for the first time in September, according to analytics firm Trepp. The rate for loans more than 30-days delinquent has increased steadily the past 12 months to 9.05% last month, up from 4.36% a year ago and 13 basis points higher than 8.92% for August. “For commercial real estate bears, the fact that the rate once again set a record is a sign that the CRE crisis is not yet over,” Trepp analysts said in the firm’s monthly delinquency report. “The CRE bulls, however, can point to the fact that the September increase in the delinquency rate is the second smallest for 2010.” The rate of mortgage loans seriously delinquent – 60+ days in foreclosure, REO, or non-performing balloons – is 8.31%. Analysts said spreads on commercial mortgage-backed securities super seniors fell again last month, tightening 10 to 15 basis points, as triple-A rated mezzanine and junior bonds continued to firm up and trade at significant premiums. The news of higher delinquencies in commercial real estate comes at a time when CMBS bond analysis is becoming more complicated. “For CMBS investors, deal analysis will become more complicated as loans default, are modified, or are liquidated by servicers,” according to Malay Bansal, head of portfolio management and advisory for CRE and CMBS at NewOak Capital. “At some point, some deals with higher delinquencies may actually be better than deals with lower delinquencies, as deals with high delinquencies may be left with better collateral after weaker loans have defaulted than deals in which weaker loans are yet to default. Careful loan-by-loan analysis will be necessary.” NewOak is an asset management, advisory, and capital markets firm based in New York. Trepp LLC is a unit of DMG Information, which is a part of British media conglomerate Daily Mail Group. Write to Jason Philyaw.
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