Commercial Mortgage-Backed Securities: UP, UP, and Away!

According to a recent report from Fitch, the percentage of commercial mortgage-backed securities loan balances that are delinquent at least 60 days or in foreclosure reached 8.76 percent, an increase of 17 basis points (0.17 percent) since January’s rate and 247 basis points (2.47 percent) over a year earlier. Fitch’s database includes approximately 37,000 loans totaling $416.9 billion. See details of the CMBS delinquencies by property sector.

March 9, 2011

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According to a recent report from Fitch, the percentage of commercial mortgage-backed securities (CMBS) loan balances that are delinquent at least 60 days or in foreclosure reached 8.76 percent, an increase of 17 basis points (0.17 percent) since January’s rate and 247 basis points (2.47 percent) over a year earlier. Fitch’s database includes approximately 37,000 loans totaling $416.9 billion.

The following chart details CMBS delinquencies by property sector as of February 28^th, January 31^st (one month prior), and February 28, 2010 (one year earlier):

Property Sector	February 2011	January 2011	February 2010
Multifamily	17.58%	17.40%	8.97%
Hospitality	14.33%	14.43%	16.61%
Industrial	9.40%	8.53%	4.16%
Retail	7.04%	6.88%	5.09%
Office	5.85%	5.50%	3.50%
Overall	8.76%	8.59%	6.29%

Key takeaway: while we expect this problem to be with us for the immediate future, delinquencies will continue to increase (except hospitality), albeit at a slower rate, hopefully indicating an end is in sight.

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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.