Overdue loans in pools of commercial mortgage-backed securities (CMBS) climbed to 6.49 percent in January, according to a report issued this week by ""Trepp LLC"":http://www.trepp.com, a New York-based company that tracks the commercial real estate market.[IMAGE]
That figure is up 42 basis points from the 6.07 percent delinquency rate in December, and Trepp says it's the highest delinquency level in the history of the CMBS industry.
What's even more troubling is that the January numbers don't include the highly publicized default on Manhattan's ""Stuyvesant Town/Peter Cooper Village"":http://dsnews.comarticles/manhattans-stuy-town-project-heads-back-to-lenders-2010-01-25 by Tishman Speyer and BlackRock at the end of last month. Trepp says the Stuy Town delinquency would add approximately 40 basis points to the CMBS delinquency rate, pushing it very near 7 percent.
Hotels, struggling under the weight of declining bookings as businesses and consumers tighten their belts, led all other categories of commercial real estate in delinquencies, soaring 145 basis points to top out above 15 percent in January.
The multifamily delinquency rate rose 44 basis points to 9.71 percent. Trepp says Stuy Town would raise the multifamily rate to near 13 percent.
Delinquencies on retail properties increased 19 basis points to 5.69 percent, while the rate for industrial commercial real estate soared 56 basis points to 4.54 percent.
Office spaces continue to post the lowest rate of all major property types in Trepp's study, at 3.90 percent. Although from December to January, office delinquencies jumped 48 basis points to register the third highest increase.
Trepp said in its report that early January saw strong CMBS performance, but most gains were given up late in the month. The percentage of securitized commercial loans falling into the seriously delinquent bucket Ã¢â‚¬" meaning 60-plus days past due, in foreclosure, REO, or non-performing balloons Ã¢â‚¬" hit 5.67 percent in January.
While some experts anticipate a possible bottom in the commercial real estate market later this year, delinquencies are expected to continue to rise. Conservative estimates put the dollar amount of commercial mortgages set to mature over the next two years close to $300 billion, and with ""lenders tightening underwriting standards"":http://dsnews.comarticles/fed-reports-pause-in-credit-tightening-2010-02-02 for commercial loans, property owners may hit a brick wall when it comes time to refinance this debt.