CMBS loan delinquencies hit 14-month high

Long Island Business News - David Winzelberg - 03 January 2017

After falling in the first couple of months last year, the delinquency rate for commercial mortgage-backed securities real estate loans in the U.S. reversed course and has now reached its highest level since Oct. 2015, according to a report from Trepp.

The overall CMBS loan delinquency rate rose to 5.23 percent in December, 20 basis points higher than November. The rate 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.

By comparison, the current CMBS loan delinquency rate is higher than it was six months ago when it was 4.6 percent and also higher than the 5.17 percent delinquency rate of a year ago, according to Trepp, the Manhattan-based CMBS loan analyst.

The percentage of loans that are at least 60-plus days delinquent, in foreclosure, or have non-performing balloon payments was 5.08 percent in December, 13 basis points higher than the previous month. Six months ago, the rate of those seriously delinquent loans was 4.48 percent.

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 2.72 percent delinquency rate last month, up from 2.5 percent in November, but down from 8.15 percent a year ago. Office properties are the worst performing sector when it comes to CMBS loan delinquencies, with a 7.13 percent delinquency rate in December, up from 6.57 percent in November and the 5.73 percent delinquency rate from a year ago.