U.S. CMBS delinquency rate breaks last month’s record

Rebound in new CMBS deals isn’t halting the flood of distressed debt in New York City:Trepp

TRD New York /
Feb.February 03, 2011 02:45 PM
From left: 478 Third Ave. in Manhattan (source: PropertyShark) and 10 Metrotech Center in Brooklyn Heights

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. The report includes loans that are at least 30 days delinquent, are in foreclosure or have been repossessed.

“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. Across the five boroughs, CMBS delinquencies rose to 7.6 percent last month, matching the record high rate set in August and bringing the total volume of delinquent CMBS loans to $5.34 billion.

The data still includes the massive, $3 billion loan on Stuyvesant Town and Peter
Cooper Village, the 110-building complex that special servicer CW Capital took ownership of last year. Excluding that loan, the CMBS delinquency rate in New York City was at 3.3 percent as of the end of January, up from 3 percent in December.

Using data from Trepp, The Real Deal has compiled a list of the New York City CMBS
loans that became severely distressed, or 60-plus days delinquent, last month, as well as a list of properties that no longer fell into that category as of Feb. 1.

The newest CMBS loans to become 60 or more days delinquent in New York City:

478 Third Avenue, Manhattan

The loan on this five-story, walk-up building in Midtown South is now 60 days delinquent with a $4.9 million balance, and according to Trepp analyst Paul Mancuso, a special servicer is in the process of collecting and ordering the documents necessary to manage the loan. The owner of the 10,950-square-foot, mixed-use property is New York real estate investor Alan Jamnik, who also owns beauty supply chain Essentials with his brother and business partner, Ramy. Jamnik was not immediately available for comment.

10 Metrotech Center, 625 Fulton Street, Brooklyn Heights

This Brooklyn Heights office building, which has a $46.67 million loan balance, has been on-and-off Trepp’s distressed list since April 2010. Last month, with a slightly higher balance, the loan was classified as performing, but that appears to have been a short-lived reprieve. The loan is now non-performing beyond maturity, Trepp said. 

(Note: correction appended).

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 Feb. 1:

The Time Hotel, 224 West 49th Street, Manhattan

The two-year forbearance agreement for the $55 million loan on Hampshire Hotels & Resorts’ Time Hotel is now being finalized, Trepp said. The most recent notes from the loan’s special servicer, LNR Partners, indicate that the loan modification will reduce the interest rate by 50 percent, to 2.9 percent, during that two-year period, while the “borrower will contribute $1.6 million to a debt service reserve as part of the agreement to cover operating and debt service shortfalls.”

299 Meserole Street, East Williamsburg, Brooklyn

There’s still a $4.2 million loan balance on this 9,800-square-foot factory, but it’s now only 30 days delinquent and therefore no longer considered “severely distressed.”

233 Norman Avenue, Greenpoint, Brooklyn

This three-story, 35,040-square-foot property has a $7.1 million loan balance, which is no longer considered “severely distressed” because it is only 30 days delinquent.

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