Commercial Mortgage-Backed Securities Report

According to Fitch, the 60-day delinquency rate on cmbs offerings reached 8.59% as of January 31, 2011, as compared to 8.23% a month earlier, and 6.00% as of a year earlier. Fitch tracks the performance of approximately 38,000 loans valued at approximately $416 billion. Read where Steve Blank advises putting your “rescue money” if it is looking for a “home.”

February 9, 2011

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Like Getting Stomped to Death by a Duck is a terrible analogy, but that is what it feels like each month as we report on the seemingly upward-only path of commercial mortgage-backed securities (CMBS) delinquencies.

According to Fitch, the 60-day delinquency rate reached 8.59% as of January 31, 2011 as compared to 8.23% a month earlier, and 6.00% as of a year earlier (ouch)! Fitch tracks the performance of approximately 38,000 loans valued at approximately $416 billion.

Got “rescue capital” looking for a “home”? Then follow the road map (chart) below which shows the percentage of loan balances by property sector in Fitch-rated CMBS offerings which are delinquent at least 60 days or in foreclosure, thereby “ranking” the location of opportunities.

Percentage of Loan Balances, by Property Sector, in Fitch-Rated CMBS Offerings Which are at Least 60 Days Delinquent or Which are in Foreclosure:

Property Sector	January 2011 (%)	December 2010 (%)	January 2010 (%)
Multifamily	17.40	15.63	8.33
Hospitality	14.43	13.99	16.44
Industrial	8.53	6.24	3.73
Retail	6.88	7.20	4.94
Office	5.50	5.69	3.06
Overall	8.59	8.23	6.00
Source: Fitch.

Too oblique? Look for multifamily deals with financial problems followed by hospitality, industrial, then retail, and then office.

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Stephen Blank

Stephen R. Blank joined ULI in December 1998 as Senior Fellow, Finance. His primary responsibilities include: expanding ULI’s real estate capital markets information and education programs; authoring real estate capital market commentary; participating as a principal researcher and adviser for the Emerging Trends in Real Estate series of publications; organizing and participating in real estate capital markets programs at ULI events worldwide; and participating in industry meetings, seminars, and conferences. Prior to joining ULI, Blank served from December 1993 to November 1998 as Managing Director, Real Estate Investment Banking of Oppenheimer & Co., Inc. His responsibilities included: structuring, underwriting, and executing corporate financings including initial public offerings of common and preferred shares, unsecured debentures, and convertible bonds; property acquisitions, dispositions, and financing; and financial advisory services including mergers and acquisitions, corporate restructurings, and recapitalizations.