CMBS Delinquency Rate Jumps Above 9% for First Time: Trepp

There was something for everyone in September when looking at the delinquency rate for loans held in commercial mortgage-backed securities (CMBS), according to the research firm ""Trepp LLC"":http://www.trepp.com.
[IMAGE] For commercial real estate bears, Trepp says the fact that the rate once again set a record is a sign that the real estate crisis is not yet over in the commercial sector. The commercial real estate bulls, however, can point to the fact that the September increase in the delinquency rate is the second smallest for 2010, according to Trepp's report.

The New York-based research firm says that during the month of September, the percentage of CMBS loans 30-plus-days delinquent, in foreclosure, or repossessed by the lender as REO jumped 13 basis points. That puts the overall delinquency rate at 9.05 percent â€" once again the highest rate on record and the first time the rate has been above 9 percent in the entire lifespan of the CMBS financing market.

The September increase follows a jump in the CMBS delinquency rate of 21 basis points in August. Trepp says only the 12 basis point gain in July was smaller than the September increase when looking at the month-to-month figures since the start of the year.

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Based on Trepp's market data, the rate of increase has averaged 33 basis points per month over the previous 12 months. Six months ago, the delinquency rate was 7.61 percent. One year ago, the delinquency rate was 4.36 percent.

The firm's analysts note that the increase for seriously impaired loans was slightly higher in September - 16 basis points. The percentage of loans seriously delinquent (60-plus-days past due, in foreclosure, REO, or non-performing balloons) is now 8.31 percent.

According to Malay Bansal, head of portfolio management and advisory for commercial real estate and CMBS at the Manhattan-based asset management firm ""NewOak Capital"":http://www.newoakcapital.com, deal analysis is becoming more complicated for CMBS bond investors because of the large volumes of loans in default, modified, and liquidated by servicers.

""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,"" Bansal said. ""Careful loan-by-loan analysis will be necessary.""

Trepp's latest report shows that hotel and retail delinquencies continue to lead the way with increases in September of 41 basis points and 37 basis points, respectively. Hotel CMBS delinquencies now are at nearly 20 percent, the highest among major property types, with retail CMBS delinquencies have topped 7 percent for the first time in history.

Multi-family and industrial delinquencies fell 10 basis points and 8 basis points, respectively last month, with industrial continuing to be the best performer among major property types.