CMBS loan delinquencies on the rise

Long Island Business News - David Winzelberg - 21 December 2016

The rising delinquency rate for commercial mortgage-backed securities real estate loans in the U.S. has reached the highest level since Dec. 2015, according to a report from Trepp.

The overall CMBS delinquency rate is up to 5.03 percent and has been headed upward since the spring when legacy loans from 2006 and 2007 started to reach their maturity dates. The delinquency rate had reached a multi-year low of 4.15 percent in Feb. 2016, while the all-time high of 10.34 percent peaked in July 2012.

About $800 million in CMBS loans were paid off with a loss or at par last month and more than $700 million in loans were cured in November, which moved the delinquency rate needle lower. However, more than $1.1 billion in loans became newly delinquent last month, which put more upward pressure on the delinquency rate, says Trepp, the Manhattan-based CMBS loan analyst.

The largest delinquent CMBS loan on Long Island, the $165.64 million loan for the CA Technologies headquarters in Islandia, was just extended, according to a source close to the financing negotiations.

The other larger Long Island CMBS loan delinquencies include properties that are either in the foreclosure process or already returned to their lenders. They include the $124 million loan for The Source Mall in Westbury; the $43.8 million loan for One Old Country Road in Carle Place; the $33.2 million loan for 275 Broadhollow Road in Melville; the $28.65 million loan for 100 Motor Parkway in Hauppauge; and the $20.94 million ‘A note’ loan for Oheka Castle.

Nationally, the best performing CMBS loan sector continues to be multifamily rental properties with a 2.5 percent delinquency rate last month, down from 8.15 percent a year ago. Office properties are the worst performing sector when it comes to CMBS loan delinquencies, with a 6.57 percent delinquency rate in November, up from 5.73 percent a year ago.