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Fitch Announces Another Record In CMBS Delinquencies

Tyler Durden's picture





 

The announcement by Fitch that CMBS delinquencies rose by another 29 bps to a new high of 6.29% is no surprise to anyone who has been following RealPoint's remittance/CMBS reports. Yet it is good to get independent confirmation that there is no respite in CMBS land. And with TALF for existing and new loans expiring on March 31 and June 31 respectively, without ever really taking of, this sector of the market is sure to face increasing pressure, especially when coupled with the certain increase in MBS rates once the last $30 billion or so in QE is purchased. The most recent culprit for deterioration: maturities of 5 year loans from the 2005 vintage as the refi market is still practically dead: "Approximately 30% of the newly delinquent loans were from 2005 transactions. In fact, the four largest newly delinquent loans (ranging in size from $65 million to $112 million) are from this vintage. Three of these four loans are past their 2010 maturity dates and are, therefore, categorized as non-performing matured loans."

Full Fitch report:

Fitch Ratings-New York-08 March 2010: Upcoming maturities from U.S. CMBS deals originated in 2005 contributed to a 29 basis-point (bp) increase in delinquencies to 6.29% at the end of February, according to the latest U.S. CMBS delinquency index results from Fitch Ratings.

Approximately 30% of the newly delinquent loans were from 2005 transactions. In fact, the four largest newly delinquent loans (ranging in size from $65 million to $112 million) are from this vintage. Three of these four loans are past their 2010 maturity dates and are, therefore, categorized as non-performing matured loans.

"Five-year loans originated in 2005 will continue to have difficulty refinancing this year as liquidity remains limited,' according to Managing Director Mary MacNeill. 'In many cases, sponsors will have to either contribute additional equity in order to refinance their loans or look to the servicers for extensions and modifications."

For the first time, office properties saw a greater than overall average increase in the index, with a 45 bp movement month over month in comparison to the overall index of 29 bps as three of the top four newly delinquent loans are office properties.  Multifamily and industrial also exceeded the overall index change at 64 and 43 bps respectively.  When the Peter Cooper Village/Stuyvesant Town loan hits 60 days delinquent, the overall index will increase 60 bps and multifamily will increase by over 400 bps.

Current delinquency rates by property type are as follows:

  • Office: 3.50%;
  • Hotel: 16.61%;
  • Retail: 5.09%;
  • Multifamily: 8.97%;
  • Industrial: 4.16%.

Fitch's delinquency index includes 2,505 loans totaling $28.5 billion of the Fitch rated universe of approximately 42,000 loans comprising $452.6 billion that are at least 60 days delinquent or in foreclosure. The Index excludes Fitch-rated loans that are 30 to 59 days delinquent, which currently total
$3.2 billion.

 


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Mon, 03/08/2010 - 10:36 | Link to Comment Anonymous
Mon, 03/08/2010 - 16:02 | Link to Comment Anonymous
Mon, 03/08/2010 - 16:05 | Link to Comment bchbum
bchbum's picture

How would tyler know?  IYR is at a 52 week high!?!?  Nothing makes any sense, its being manipulated beyond belief.

Mon, 03/08/2010 - 10:54 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

This is an interesting twist of that age old question "If a tree falls in the woods and there's no one around to hear it, did it make a sound?".

If CRE technically defaults but the lender doesn't wish to recognize the default, did the CRE default?

Mon, 03/08/2010 - 11:15 | Link to Comment Gromit
Gromit's picture

No. Just as marriage is valid until at least one of the parties files, doesn't mean all vows have been observed.

Probably 90% of CMBS is in technical violation of some stipulation or other, regarding rents, vacancy, insolvency of one or more borrower etc etc.

 

Mon, 03/08/2010 - 11:33 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

It was a rhetorical question but since you answered.

Default is a contractually specific event. I'm not talking about a violation, though I certainly understand what you're talking about. But a violation may or may not trigger a default. A default is the culmination of one or more violations that triggers the legal ability to repossess.

And as my state helpfully pointed out, a marriage is valid until the state decides it isn't valid. The relationship might be long gone but "marriage" is strictly a legal contract that can only be affirmed, broken or annulled by the state. Isn't that right, dear ex-wife?

Mon, 03/08/2010 - 12:53 | Link to Comment SteveNYC
SteveNYC's picture

You make a good point. However, with fraud and government/Fed intervention the norm, there is no real price discovery, and therefore almost ZERO transactions taking place.

The loss is realized when held to maturity or the tenant goes ass-up. At some point, the rug will burst and all the shit they've swept under it will spew forth.

CD, you seem like you have a good grasp on Buddhist psychology. Those of us who practice know what happens to the mind, the body, when problems are not dealt with, just covered over. They grow in the dark, then manifest, bigger and bigger each time.

Mon, 03/08/2010 - 12:05 | Link to Comment Anonymous
Mon, 03/08/2010 - 13:16 | Link to Comment Anonymous
Mon, 03/08/2010 - 14:38 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

This, of course, assumes the "rules" are being followed. It seems to me many financial entities are receiving a "get-out-of-jail" card to ignore those monsters under the bed. Or maybe it just looks that way.

Mon, 03/08/2010 - 11:02 | Link to Comment Anonymous
Mon, 03/08/2010 - 11:08 | Link to Comment Anonymous
Mon, 03/08/2010 - 11:24 | Link to Comment repete
repete's picture

if I express an opinion about something and my wife doesn't hear it am I still WRONG?

Mon, 03/08/2010 - 12:04 | Link to Comment Anonymous
Mon, 03/08/2010 - 12:19 | Link to Comment Gimp
Gimp's picture

There is no reality in the markets regardless of the news, manipulators hard at work pushing it higher. I do agree with others sentiment though, the bigger the bubble the louder the burst.

Mon, 03/08/2010 - 12:21 | Link to Comment Gimp
Gimp's picture

Just noticed the "Buy Califorina Bonds", Ad, beautiful state but as far as an investment...NOT.

Mon, 03/08/2010 - 13:29 | Link to Comment RobotTrader
RobotTrader's picture

Wow...

Maguire Properties rocketing today..

And the REITs are skying to new 52-wk. highs...

 

 

Mon, 03/08/2010 - 13:41 | Link to Comment Anonymous
Mon, 03/08/2010 - 13:44 | Link to Comment BlackBeard
BlackBeard's picture

 This is the song that never ends...it just goes on and on my friend...

Thu, 04/15/2010 - 10:42 | Link to Comment mark456
mark456's picture

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