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CMBS Delinquencies Continue to Rise

CMBS Delinquencies Continue to Rise

In February, the delinquent unpaid balance for CMBS rose $1.87 billion, up to $47.82 billion from $45.94 billion a month prior, according to Horsham, Pa.-based Realpoint LLC. However, the rise was lower than the jumps in the three previous months when the unpaid balance jumped by more than $3.7 billion each month.

Overall, the delinquent unpaid balance is up 300 percent from a year ago and is now more than 21 times the low point of $2.21 billion in March 2007. The distressed 90+-day, foreclosure and REO categories grew in aggregate for the 26th straight month—up by $2.88 billion from the previous month. The total unpaid balance for CMBS pools reviewed by Realpoint for the Freburay remittance was $797.06 billion, down slightly from $797.3 billion in January.

The delinquency ratio for February of 6.00 percent (up from the 5.76 percent reported for January) is more than four times the 1.43 percent reported in February 2009 and 21 times the Realpoint recorded low point of 0.28 percent in June 2007.

Realpoint maintained its projection for the delinquent unpaid CMBS balance, which it expects to reach between $60 billion and $70 billion by mid 2010. The firm also projects the delinquency percentage to grow to between 8 percent and 9 percent through the mid 2010 and potentially surpass 11 percent to 12 percent under more heavily stressed scenarios through the end of the year.

By property type, in January, retail loans topped multifamily loans as the greatest contributor to overall CMBS delinquency, at 1.50 percent of the CMBS universe and 25.0 percent of total delinquency. The retail default rate remained steady at 5.40 percent, up substantially from only 1.3 percent one year ago. Realpoint expects retail delinquencies to continue to increase throughout 2010.

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