CMBS Delinquencies Rise Another $2.9 Billion
Mike Scorelle 2010-07-06
Commercial mortgage backed securities delinquencies rose another $2.9 billion, up to $57.34 in May 2010, according to a report from Realpoint.
“This included an increase in four of the five delinquency categories as the 30-day category reflected a slight decrease from the prior month, while all other categories grew notably due to credit deterioration.
Overall, the delinquent unpaid balance is up 205% from one-year ago (when only $18.78 billion of delinquent unpaid balance was reported for May 2009), and is now 26 times the low point of $2.21 billion in March 2007.
The distressed 90+-day, Foreclosure and REO categories grew in aggregate for the 29th straight month – up by $1.99 billion (5%) from the previous month and $32.18 billion (297%) in the past year (up from only $10.85 billion in May 2009),” the report stated.
The resultant delinquency ratio for May 2010 of 7.27% (up from the 6.91% reported one month prior) is over three timesthe 2.28% reported one-year prior in May 2009 and over 25 times the Realpoint recorded low point of 0.283% from June 2007. The increase in both delinquent unpaid balance and percentage reflects a steady increase from historic lows in mid-2007.
“The $4.1 billion Extended Stay Hotel loan from the WBC07ESH transaction remained 90+-days delinquent in May 2010. On May 28, 2010, it was reported that Paulson & Co., Centerbridge Partners LP and Blackstone Group LP won the bankruptcy auction bid for the Extended Stay Hotel chain at $3.925 billion ($53,375/key), topping a rival bid from a group led by Starwood Capital.
The winning bid has positive implications for the $4.05 billion in senior CMBS debt contained within this transaction as the hotel chain (collateral) appraised for only $2.814 billion not long ago in August 2009.
Meanwhile, despite only the $800 million portion of the $3 billion Peter Cooper Village / Stuyvesant Town pari passu loan (ultimately spread through five CMBS deals) in the MLCF0705 transaction was reported as 60-days delinquent for May 2010, the four remaining pieces were reported as current in payments.
Subsequently in June, all portions of the loan have been reported delinquent and a federal judge granted summary judgment in favor of the mortgage creditors, allowing foreclosure proceedings to begin.
In addition to this loan, we are closely monitoring $2.64 billion of debt associated with the Beacon and Seattle pool that is broken down into six securitized pari passu notes, some of which have already been reported as specially serviced but remain current in payments.
In March 2010, Beacon Capital Partners LLC defaulted on the $480 million Columbia Center loan, which includes a $380 million A-note securitized in MSC07H12 that was transferred to the special servicer. Following this recent activity, default risk has been elevated,” the report continued.
Realpoint believes that CMBS delinquency will potentially reach between 11 and 12 percent under more heavily stressed scenarios throughout the end of the year.
Realpoint
anotherfp.com
CRACKER |
