U.S. CMBS loan delinquency rate reaches record high

New York City's Time Hotel and 23-25 Arden Street loans in delinquency, report shows

TRD New York /
Jan.January 05, 2011 06:33 PM
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.”

In New York City, some high profile CMBS loans entered — and exited — Trepp’s trouble list.

The newest CMBS loans to become 60 or more days delinquent in New York City, based on data from analytics firm Trepp through Jan. 1 and research by The Real Deal:

The Time Hotel, 224 West 49th Street, Manhattan

Despite leaving the Trepp list of delinquent loans just last month, the Time Hotel, which has a $55 million loan balance, is back on it. Paul Mancuso, vice president of Trepp, said that the Time Hotel’s current loan modification “is why [it] yo-yos back and forth.” Notes from the loan’s special servicer indicate that the modification includes a two-year forebearance “to reduce the interest rate by 50 percent during the same timeframe.” A spokesperson for parent company Hampshire Hotels & Resorts, which also owns the Dream Hotel in Midtown, which had previously been on the Trepp list, did not immediately respond to a request for comment.

23-25 Arden Street, Manhattan

The other new mortgage-backed securities loan to join Trepp’s list last month is a loan on a Fort George multi-family property. The loan balance — the lowest of all 48 on the list — is $1.84 million. The loan was transfered to special servicing Oct. 29 in anticipation of default. As of December, the mortgage was 60 or more days delinquent. The owners of the property were not immediately reachable for comment.

The following three CMBS loans backed by New York City properties had been previously classified as “severely distressed” by Trepp but were no longer 60 or more days delinquent as of Jan. 1:

10 Metrotech Center, 625 Fulton Street, Brooklyn Heights

This loan, which has a $47.98 million balance, is now performing, meaning it is no longer 60-plus days delinquent. The loan for the Brooklyn Heights office building first appeared on Trepp’s distressed list in April 2010.

The Falchi Building, 31-00 47th Avenue, Long Island City, Queens

The loan on this retail hotspot, which underwent a renovation in March 2006, is now performing, after popping up on Trepp’s list in April 2010. The property carries a $40.6 million loan balance.

The Core Club, 66 East 55th Street, Manhattan

The distressed debt on this property, owned by financier Aby Rosen’s RFR Holdings, was liquidated at a loss, according to the Trepp data. Although the $17.73 million debt balance was cleared from the list this past month, reports of Rosen’s debt buy-back emerged in November. It was not immediately clear when the deal was finalized. The property bounced on and off the list of top delinquent CMBS loans throughout 2010, according to past Trepp reports.

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