As demand for distressed U.S. commercial assets crescendos, UBS is shopping a pool of failing commercial mortgages with a face value of $1.5 billion, Bloomberg News reported. Bids for the portfolio are due Wednesday. [more]

Financial research and ratings firm Standard & Poor’s has been pushed out of commercial mortgage-backed securities deals following a $15 billion sale that went south last year, Bloomberg News reported.

Last July, a massive deal between Citigroup and Goldman Sachs fell apart after S&P pulled its ratings for the securities in the deal, saying it had to review its model used in rating the assets. Now, Wall Street is pushing back, finally busting the trio of ratings agencies that have had a stranglehold on the U.S. bond market, Bloomberg said. [more]

The number of distressed loans tied to commercial mortgage-backed securities inched up last month, according to information from analytics firm Trepp, the Wall Street Journal reported. About 9.6 percent of CMBS loans tied to all types of commercial property were at least 30 days delinquent, up from 9.5 percent in November. Office properties led the pack in delinquency. The delinquency rate for offices hit 8.97 percent in December, up from 8.29 percent in September and 6.93 percent in 2010. The number of distressed loans tied to CMBS inched up last month, according to information from analytics firm Trepp, the Journal said. [more]

More than 70 percent of 280 surveyed real estate CEOs, COOs and CFOs said they have a negative, or “bearish,” outlook for the commercial real estate sector over the next 12 months. The poll, cited by Reuters, was conducted by global law firm DLA Piper in connection with its Global Real Estate Summit held today in Chicago.

A lack of confidence in the Obama administration, the general gridlock in Washington and poor job growth were reasons behind the pessimism. Though sales have increased this year, and prices are up 12.5 percent from their lows in April, investors worry that the market will lose more footing.
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A $1.5 billion commercial mortgage bond sale between Goldman Sachs and Citigroup has been scrapped, the companies said, because Standard and Poor’s would not rate the notes. According to Bloomberg News, the deal had been slated to close today but was delayed because S&P is reviewing its criteria for rating commercial mortgage-backed securities.

“Ratings are a condition precedent to closing and settlement,” Goldman Sachs and Citigroup said in the statement to Business Wire. “Standard & Poor’s had previously informed Goldman and Citi that they were prepared to rate” the transaction, they said.

The risk assessor explained the change in a separate statement.

S&P ’’is reviewing the application of our conduit/fusion CMBS criteria in relation to the calculation of debt service coverage ratios,” it said yesterday. [more]

Crexus Investment Group said yesterday evening that it rejected an unsolicited $254 million acquisition offer by Starwood Property Trust. In the late afternoon yesterday, Starwood made the $14-a-share-offer to acquire Crexus, a Manhattan-based real estate investment trust. The Starwood offer was contingent on Crexus suspending its previously announced offer to buy $586 million in real estate assets from Barclays Capital Real Estate Finance. Crexus planned to launch an initial public offering of $50 million shares of common stock, which would be used to finance the acquisition of the Barclays assets. [more]

Apollo Commercial Real Estate Finance posted a 22 cent per share earning in fourth-quarter 2010, the company announced today, a decided improvement over the same time period a year earlier, when share values dropped by 20 cents each. Shares were valued at $16.97 each at the end of the quarter. The company purchased $107.54 million in commercial mortgage-backed securities in the fourth quarter, investing $15.64 million of its own equity and receiving $91.9 million in financing from Wells Fargo. TRD

The volume of new U.S. commercial mortgage-backed securities issued is projected to rise to $37 billion this year, Moody’s Investors Service said in a report today. According to the report, the highest end of the market is rebounding most quickly, with prices for trophy assets already on the rise. But the recovery isn’t in full speed yet, with small property prices flat-lining and distressed property values falling further still, Moody’s said. CMBS delinquencies are predicted to increase to between 9.5 percent and 11 percent by the end of the year, with a 20 percent rate for loans in special servicing. TRD [more]

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.” TRD

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. “CMBS new issue still offers attractive returns relative to other fixed-income products,” said Andrew Solomon, a managing director at Angelo Gordon. “Even with new issuance picking up steam, the net supply of CMBS is still shrinking while demand is increasing. I’m pretty sure that means spreads are going to continue tightening.” Both the Deutsche Bank and UBS transaction and the JPMorgan offering are slated for next month. [Bloomberg]