The Real Deal Miami

New benchmark set for U.S. CMBS delinquency rate

May 31, 2012 02:15PM

The delinquency rate for commercial mortgage-backed securities in the U.S. has surpassed 10 percent for the first time ever, confirming suspicions that a bevy of loans originated just before the market crashed in 2007 would plague lenders as they came due early this year. Citing Trepp data, GlobeSt.com reported the delinquency rate rose to 10.04 percent in May after coming in at 9.80 percent in April. Since February the CMBS delinquency rate has jumped 67 basis points.

In total, $59.1 billion worth of loans are delinquent and an additional $79.2 billion in loans is in special servicing. The multi-family sector is in the worst shape as 15.17 percent of its loans are delinquent. The Stuyvesant Town apartment complex in New York City has $3 billion in delinquent loans, which accounts for about 4 percent of that figure. But the hotel sector experienced the largest month-over-month delinquency growth, as its rate skyrocketed 172 basis points to exceed 12 percent.

“You have this issue that so much of the lending was done at the worst possible time for CMBS,” said Manus Clancy, senior managing director at Trepp. “In CMBS, there was a huge super spike in 2006 and 2007, and they were making loans for the worst time in the market.”

Clancy said he expects another month or two of increasing delinquency rates before they begin to level off. [GlobeSt]