Commercial Real Estate Loan Delinquencies Rise Again

Tyler Durden's picture

Authored by Mark Melin via ValueWalk.com,

There is a slow creep in delinquent credit that is starting to get noticed. The special-servicing and delinquency rates for securitized commercial mortgages rose again last month, Commercial Mortgage Alert first reported. While the rise was reasonably contained, it is the trend of commercial underperformance that is causing a mild degree of concern. The data on Commercial Real Estate comes as investors are closely watching the prospects for retail malls across the country.

Commercial Real Estate – More distress

The percentage of commercial mortgage-backed security (MBS) loans in special servicing hit 6.6% to close April, Commercial Mortgage Alert reported, citing Trepp data. The five basis point move higher from March came as the past-due rate on Fitch-rated commercial mortgage-backed securities (CMBS) climbed by nine basis points to end April at to 3.5%.

Both MBS and CMBS rates hit their highest levels since 2015.

“The shrinking CMBS universe, which has long contributed to a steady rise in both rates, had a far more substantial impact on Trepp’s tally,” the Commercial Mortgage Alert analysis pointed out.

 

Special services loan volume dropped by $438.4 million, to $27.2 billion, a drop that was “overshadowed by a $9.5 billion plunge in the aggregate balance of outstanding CMBS.” This plunge, as a result, reduced the denominator in Trepp’s calculation to $411.9 billion as of April 30.

Big office property delinquencies in the Southwest also drive the numbers

Driving that data was a number of idiosyncratic situations.

The biggest mortgage added to the CMBS reporting involved office properties in the Southwest. The $198.5 million fixed-rate loan to Crystal River Capital of New York was noted on three properties in Arizona and Texas: a 724,000-square-foot office building and an adjacent 1,905-space garage in Phoenix and a 429,000-sf office building in Houston.

The 10-year loan was transferred to special servicer C-III Asset Management on March 16, Commercial Mortgage Alert noted, following the warning it would default at maturity on April 1. The debt is now classified as nonperforming beyond maturity and was originated by Deutsche Bank and offered as a $4 billion pool offering.

Fully $819 million of mortgages were added to Fitch’s past-due roll last month. That number was notably greater than the $544 million of loans that moved off the list after being sold, modified or otherwise resolved. When paydowns are considered, Fitch’s tally of 60-day late loans payments or deals in foreclosure or maturity default rose to $12.4 billion, higher by $283 million during April.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Cordeezy's picture

Amazon will destroy commercial real estate for years to come.  I see so many empty retail spaces out there, Amazon is the Wal-mart of the internet.

 

www.escapeamazon.com

Consuelo's picture

 

 

Much of this has something to do with the child-like excitement of getting something in the mail, aside from the convenience aspect.

 

Seriously.

No_More's picture

I don't disagree but with a bunch of people about to need elder care and wanting (or having) to stay in their own homes, some kind of mail order / internet option is a God send. Doesn't have to be Amazon, but you don't take the demented or the dying for shopping sprees at big box stores.

Semi-employed White Guy's picture

And yet they still build more strip malls, even with all of the empty storefronts.  It doesn't really matter if they are ever occupied. That Fed money backed by nothing has to be spent somewhere.

No_More's picture

Shades of Texas & the S&L scandal of the 1980s.

zzzz88's picture

DO NOT blame amazon, blame FED and central government, 

when you look at amazon's accounting, you will know the reason amazon gets this big, this fast, this 200 pe is just because of low interest rate, 

sadly, most people just thought it is online retail killed the retail. no, it is FED!!!!!!!!!!!!!!!!!!!!!!!!

LawsofPhysics's picture

Yes, but corporations=people...

so as a "limited liability person" I have many options for collecting the rent...

Now, where were we, ah yes, "fuck you, pay me!"

zzzz88's picture

residential housing forecloure will follow soon

I am Jobe's picture

Yes after property taxes rises like crazy. Austin/Round Rock already raising poperty taxes by 5%. 

Number 9's picture

burn the house down. collect insurance and pay taxes on an empty lot

zzzz88's picture

agree. everything is interconnected with each other----government need more tax from residential re when commercial re down, more laid off workers can not pay for more retail consumption, ....on and so on,

the fire is on, even though most people are still fight for residential houses, 

this is why we are called HERD/SHEEPLE

Hitlery_4_Dictator's picture

You would have to be a fool to live in RR or Austin. I moved out of RR a few years ago to the county, pay 195.00 a year in property taxes.  

Number 9's picture

max the cards b/4 they cut you off.

I am Jobe's picture

empty buildings are good for the economy . Texas keeps building more and more buildings however has lots of lease signs. 

yogibear's picture

Go long demolition companies as these return to vacant land.

QQQBall's picture

Smart lenders already been cutting LTVs and being real picky about deals they will even look at.  This has been going on for a while now. The difference b/w the MFD sector and say retail is really stark; industrial been pretty solid in Socal.

Houses Depreciate's picture

Mortgages imploding already. Too many are paying their mortgage with HELOC's.

yogibear's picture

How many REITS have ties to these empty properties?

Way too many banks and malls.

At least 50% of retail, brick and mortar needs to fold from the highs.

Plus baby-boomers getting rid of their stuff, their downsizing and retiring (cutting costs).

PresidentCamacho's picture

Are you guys ready for the next leg down, 2008 all over again.

First the commercial real estate is the leading indicator because everyone is broke as fuck.

Then you have the housing "crisis" which is another way of saying the fed inflated prices through the fucking roof and financed everyone who voted democrat in the last election (living, dead, and illegal invader) Then they didn't pay.

Wall street will say OMG WE ARE TOO BIG TO FAIL then fuck every single person in this country with two pennies or more to rub together but not more than two million and politically connected.

We will have liberal protests about big corps and banks

Then we will have conservative protests about big gov and big tax.

Then we will repeat with more police brutality, more fake wars, and more fake terrism.

AMERICA needs jesus to come back, or we need our own fucking hitler this shit has got to stop.

zzzz88's picture

we are ready or not ready does not matter, when the storm comes, it just comes 

this artificial economic cycle is already too old, too overdue.

when you see a 100's person, you are amazed  that he/she can live this long, 

but,

also do remember,

this person may die next second, or next day, 

the same is for our economy. do not be surprised,

RiverRoad's picture

Rinse/Repeat cycle coming sround faster and faster.

Lost in translation's picture

Yep, been ready for 9 years.

BRING IT.

PresidentCamacho's picture

lit and z98888

 

I am ready, be on guard.

zzzz88's picture

DO NOT blame amazon, blame FED and central government, 

when you look at amazon's accounting, you will know the reason amazon gets this big, this fast, this 200 pe is just because of low interest rate, 

sadly, most people just thought it is online retail killed the retail. no, the TRUE reason is FED!!!!!!!!!!!!!!!!!!!!!!!!

FED killed savers, pensions, you and me, and retails!!!!!!!!!!!!!!!!!!!!!!

ajkreider's picture

Nine basis points!  Whew!  (clutches pearls).

It was at all time lows.  This is the least of our problems.  No bubble.

Stan Smith's picture

The Fed has destroyed the future for many Americans.    They should be embarrassed.   Im confident they are not.

Houses Depreciate's picture

Encouraging gross malinvestment into rapidly depreciating houses has its downside..... and it's an unprecedented one.

ThankUGartman's picture

The end is near....2032 I think whenever that comet flies by again. U know the one..