LNR Property is angling to invest in a $600 million pool of Cantor Fitzgerald commercial property loans in what would be its first debt purchase since the revival of the commercial mortgage-backed securities market that began last year, sources told Bloomberg News. Florida-based LNR would purchase the most junior portion of the pool, known as the b-piece, which is riskier but with higher yields. Cantor Fitzgerald said in a regulatory filing this week that it may issue up to $1 billion in commercial-mortgage bonds as it builds up its new real estate practice, Cantor Commercial Real Estate. [Bloomberg]

From left: 478 Third Avenue in Manhattan (source: PropertyShark) and 10 Metrotech Center in Brooklyn

The volume of delinquent commercial mortgage-backed securities in the U.S. rose to a staggering $61.4 billion last month, pegging the delinquency rate at a record-high 9.34 percent, according to a new report from real estate analytics firm Trepp. “While the rate continues to head higher, optimists can point to the fact that the rate of increase is significantly smaller than it was in the prior two months,” said Manus Clancy, managing director at Trepp. “Pessimists can counter that the jump comes despite the fact that new issues continue to make their way into the calculation and servicers continue to resolve troubled loans.”
After all but disappearing in the aftermath of the real estate crash, the CMBS market has already begun to rebound, with, by Trepp’s count, $12.7 billion in issues in 2010. Moody’s Investors Service recently projected that figure would rise to $37 billion this year. The Real Deal chronicled the reincarnation of the nation’s CMBS market in the January print magazine.

But in New York City, those fresh CMBS issues don’t appear to have made a dent in the delinquency rate yet. [more]

From left: 224 West 49th Street and 23-25 Arden Street (source: PropertyShark)

Commercial real estate investors may still feel some pain in 2011, according to a new report released today by Trepp. Nationwide, the rate of commercial mortgage-backed securities loans that are 30 or more days delinquent climbed to 9.2 percent in December, the highest ever recorded, according to Trepp. Manus Clancy, managing director of Trepp, said that the rocky nationwide delinquency rate was an indication of a rough road ahead in the commercial market.

“Many have speculated that… the commercial real estate crisis was nearing its final stages,” Clancy said. “The December delinquency rate underscored that there still may be some nasty surprises in store even as the market shows some signs of healing.”

Click here to see the high profile New York City CMBS loans that entered — and exited — Trepp’s trouble list. [more]

Deutsche Bank, UBS and JPMorgan Chase are preparing the year’s first bond sales tied to commercial property loans, sources told Bloomberg News. Deutsche Bank and UBS are partnering to issue as much as $2.5 billion in commercial mortgage-backed securities linked to loans on office buildings, shopping malls and hotels in what would be the largest offering of its kind since the market froze in June 2008. JPMorgan plans to sell $1.5 billion in similar debt. Comments

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Commercial mortgage-backed securities loans are showing unusually high delinquency rates, according to the Mortgage Bankers Association, which noted that third-quarter delinquencies in that class of loans reached 8.58 percent — their highest level in more than 10 years. But other commercial and multi-family loans showed improvement in the third quarter, according to the MBA, with delinquency rates on loans held by Fannie Mae and Freddie Mac both below 1 percent. TRD [more]

Delinquency uptick driven by Pinnacle-Praedium default on Upper West Side

The volume of seriously impaired CMBS loans in New York City grew by 3.8 percent last month after a portfolio of 1,083 Upper West Side apartments co-owned by Pinnacle Group and private equity partner the Praedium Group slipped further into delinquency, according to October data from Trepp compiled for The Real Deal. The data includes CMBS loans backed by New York City properties whose payments are more than 60 days overdue. The Pinnacle-Praedium delinquency — the fourth-largest of 49 such loans in the city — was solely responsible for the increase, which put the city’s total volume of loans more than 60 days delinquent at $4.9 billion (see the full list of seriously delinquent New York City CMBS loans after the jump).

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The delinquency rate among commercial mortgage-backed securities climbed gradually in September, according to Moody’s monthly CMBS report. Delinquencies climbed 14 basis points on the Moody’s index, hitting 8.24 percent, marking the smallest monthly increase since October 2008. The 311 loans that became newly delinquent last month had a combined value of $3.8 billion and brought the total number of delinquent loans to 3,971, representing $52 billion in debt. Nick Levidy, a managing director with Moody’s, said that while the rate of increase among CMBS delinquencies was modest last month, it’s far too soon to celebrate. “This easing of the rate of growth in the delinquency rate does not necessarily portend a near-term improvement in the market,” Levidy said. “The number and balance of loans becoming newly delinquent remain high.” TRD

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Investment management firm BlackRock was hired by state insurance regulators to evaluate the industry’s potential losses from holding commercial mortgage-backed securities, Bloomberg news reported. By the end of the year, BlackRock will review more than 7,000 securities, the National Association of Insurance Commissioners said yesterday in a statement. The New York-based firm will calculate loss expectations for the holdings, which will determine how much capital insurers must hold to cushion potential declines, NAIC said. Insurance regulators are searching for an alternative to Moody’s Investors Service and Standard & Poor’s, whose ratings were cited by some as one cause of the financial crisis. BlackRock advised financial companies and governments during the credit crisis on how to value mortgage-related assets. It won the NAIC contract from among 16 bidders. [Bloomberg]

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Wells Fargo is shoring up its staffers on the commercial mortgage-backed securities front in anticipation of a resurgence of the market, bank representatives told Bloomberg news. The CMBS market was previously led by Wachovia, which was acquired by Wells Fargo in 2008 for $12.7 billion after it reported more than $2.1 billion in CMBS-related losses in 2007 and 2008. Among Wachovia’s soured deals was the $7.9 billion bond that included financing for the 2006 purchased of Stuyvesant Town and Peter Cooper Village — the largest CMBS deal in history. The buyers handed over the keys to the complex earlier this year after defaulting on their mortgage. But that’s not deterring Wells Fargo, which has added more than 20 bankers and support employees over the past three months. The new staffers are helping to increase loan originations and bundle them into CMBS, said Ed Blakely, the bank’s head of commercial mortgage lending and servicing. And Wells Fargo isn’t alone. Australian investment bank Macquerie Group announced last month that it is targeting the U.S. CMBS market with a new group, and New York-based Cantor Fitzgerald said earlier this month that it plans to originate and securitize $5 billion in loans over the course of the next year. [Bloomberg]

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JPMorgan Chase is offering up $484.6 million in bonds backed by a loan to Australian shopping mall owner Centro Properties Group, according to Bloomberg news, and more than one-fifth of that loan is secured by New York and New Jersey retail properties. The remainder of the pool is accounted for by shopping centers in Australia and Texas, and together the properties constitute the sixth sale of commercial mortgage-backed securities this year. Earlier this month, Vornado Realty Trust completed a $660 million CMBS issue. After a record $234 billion in CMBS was issued in 2007, sales dropped to $11.2 billion in 2008 and Wall Street is still struggling to recover. JPMorgan is said to be readying a $1 billion deal — comprised of 38 loans to different property owners — for September, which would make it the largest of the year thus far. [Bloomberg]

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