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CMBS Delinquencies Now Above 7 Percent: Reports

The delinquency rate for commercial mortgage-backed securities (CMBS) surged above 7 percent in March, according to reports recently released by ""Trepp LLC"":http://www.trepp.com/main.cgi and ""Fitch Ratings."":http://www.fitchratings.com/index_fitchratings.cfm


Trepp, a New York-based company that tracks the commercial real estate market, said February's increase in CMBS delinquencies was the smallest bump in nine months, and there was some guarded optimism that delinquencies might be beginning to moderate.

But March data threw cold water on any notion that CMBS delinquencies might be nearing their peak, the tracking company said.

According to Trepp's monthly delinquency report TreppWire, the percentage of loans 30 or more days delinquent, in foreclosure, or REO jumped 89 basis points in March to 7.61 percent -- the highest monthly increase since the summer of 2009.


Fitch, a ratings company also based in New York, reported the same upward trend, saying CMBS delinquencies soared 85 basis points in March to 7.14 percent.

Both companies agreed that the data was inflated by the fact that New York City's $3 billion Stuyvesant Town (Stuy Town) is now considered ""in foreclosure.""

Even after subtracting out the Stuy Town impact, delinquencies were still up over 49 basis points in Trepp's report. That's more than twice the rate increase in February.

Stuy Town had an even more notable effect on Fitch's delinquency rates. The company said that one foreclosure filing alone contributed 61 basis points to the overall month-to-month increase of 85 basis points.

According to Fitch, delinquency rates are most prevalent in multifamily and hotel sectors. Of all the multifamily-backed loans that Fitch rates, more than 13 percent were delinquent in March, outdone only by hotel-backed loans with a delinquency rate of 17.2 percent.

The same was true in Trepp's report. Multifamily delinquencies were at 13.19 percent in March, and the lodging delinquency rate of 16.89 percent was the highest of all property types.

Looking forward, Mary MacNeill, managing director of Fitch, said recent notable transfers to special servicing are indicating a future increase in office delinquencies.