Commercial Mortgage Backed Securities Hit Record Delinquency Rate

Posted by Daniel Jones on Mar 2, 2011 5:07:00 PM

The delinquency rate for commercial mortgage-backed securities reached record levels in February, as commercial real-estate deals made in the market's peak continue to struggle despite rising values in some parts of the country.

According to research firm Trepp, 9.39% of all CMBS loans were delinquent in February, a modest increase from 9.34% in January.

The bulk of troubled CMBS loans, mortgages bundled together and sold to investors as bonds, were made in 2006 and 2007. At least $22 billion of those loans are expected to mature in 2011, according to Fitch Ratings.

Of property types, one of the larger jumps was in the office sector, with 7.1% of office loans delinquent, up from 6.88% in January. Multifamily apartments were the worst performing, with 16.61% of loans delinquent in February, although that rate was down from a peak of 16.85% in January.

The increase in delinquencies comes even as the volume of delinquent loans sitting on banks' balance sheets is on the decline.

For the last three months of 2010, banks and thrifts reported that 7.8% of commercial real-estate loans were more than 30 days past due, according to data from the Federal Deposit Insurance Corp. and Trepp, down from a peak of 9.1% in the first quarter of 2010...

http://online.wsj.com/article/SB10001424052748703409904576174652993921360.html
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