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By David M. Levitt
May 7 (Bloomberg) -- Commercial mortgage delinquencies in the U.S. climbed to the highest level in at least 11 years in April as scarce credit made it difficult for landlords to refinance loans, according to property research firm Trepp LLC.
The percentage of loans 30 days or more behind in payments rose to 2.45 percent, Trepp LLC said in a report. The delinquency rate was more than five times the year-ago number, Trepp said. The New York-based researcher’s records go back to 1998.
“It’s about as bad as it’s ever been,” said Thomas Fink, a Trepp senior vice president. “I don’t think we’re done yet. Where it’s going to top out, I don’t know, but we’re not done.”
The market for securitized commercial mortgages, which helped fuel an 88 percent rise in U.S. commercial property prices between 2001 and late last year, shut down in 2008 as financial institutions racked up losses and asset writedowns of more than $1.38 trillion related to residential mortgage defaults. Commercial property values fell 21.5 percent through February from their October 2007 peak, according to Moody’s Investors Service.
Properties bought in 2006 are now worth on average 11 percent less than their original price, and those bought in 2007 are worth almost 20 percent less, Moody’s said.
Trepp’s 30-day delinquency rate remained under 1 percent from October of 2005 to last November.
Apartment Delinquencies
Mortgages on rental apartment buildings posted the highest delinquency rate of securitized commercial property loans in April, rising to 5.24 percent from 3.86 percent in March, Trepp said.
Federal Reserve Chairman Ben S. Bernanke told a congressional committee on May 5 that commercial real estate conditions are poor, citing rising vacancy rates, falling property values and “severely constrained” access to credit.
“A lot of commercial real estate owners are having difficulty refinancing their debt or obtaining new financing for new projects,” he said. “There’s a large amount of CRE refinancing coming due in the next year or two and we need to have that market functioning so that can happen smoothly.”
At least $410 billion of commercial mortgages bundled and sold as bonds coming due from 2009 to 2018 will need additional cash to refinance, Deutsche Bank AG analysts led by Richard Parkus in New York said in an April 22 report.
Under new revisions to the Fed’s Troubled Asset-Backed Securities Loan Facility, or TALF, program, the agency will offer five-year loans to buy new AAA-rated new commercial mortgage-backed securities, as part of an effort to revive the dormant market for those investments.
To contact the reporter on this story: David M. Levitt in New York at [email protected].
Last Updated: May 7, 2009 13:41 EDT
Source: http://www.bloomberg.com/apps/news?p...vkU&refer=home
Cheers
Marc
May 7 (Bloomberg) -- Commercial mortgage delinquencies in the U.S. climbed to the highest level in at least 11 years in April as scarce credit made it difficult for landlords to refinance loans, according to property research firm Trepp LLC.
The percentage of loans 30 days or more behind in payments rose to 2.45 percent, Trepp LLC said in a report. The delinquency rate was more than five times the year-ago number, Trepp said. The New York-based researcher’s records go back to 1998.
“It’s about as bad as it’s ever been,” said Thomas Fink, a Trepp senior vice president. “I don’t think we’re done yet. Where it’s going to top out, I don’t know, but we’re not done.”
The market for securitized commercial mortgages, which helped fuel an 88 percent rise in U.S. commercial property prices between 2001 and late last year, shut down in 2008 as financial institutions racked up losses and asset writedowns of more than $1.38 trillion related to residential mortgage defaults. Commercial property values fell 21.5 percent through February from their October 2007 peak, according to Moody’s Investors Service.
Properties bought in 2006 are now worth on average 11 percent less than their original price, and those bought in 2007 are worth almost 20 percent less, Moody’s said.
Trepp’s 30-day delinquency rate remained under 1 percent from October of 2005 to last November.
Apartment Delinquencies
Mortgages on rental apartment buildings posted the highest delinquency rate of securitized commercial property loans in April, rising to 5.24 percent from 3.86 percent in March, Trepp said.
Federal Reserve Chairman Ben S. Bernanke told a congressional committee on May 5 that commercial real estate conditions are poor, citing rising vacancy rates, falling property values and “severely constrained” access to credit.
“A lot of commercial real estate owners are having difficulty refinancing their debt or obtaining new financing for new projects,” he said. “There’s a large amount of CRE refinancing coming due in the next year or two and we need to have that market functioning so that can happen smoothly.”
At least $410 billion of commercial mortgages bundled and sold as bonds coming due from 2009 to 2018 will need additional cash to refinance, Deutsche Bank AG analysts led by Richard Parkus in New York said in an April 22 report.
Under new revisions to the Fed’s Troubled Asset-Backed Securities Loan Facility, or TALF, program, the agency will offer five-year loans to buy new AAA-rated new commercial mortgage-backed securities, as part of an effort to revive the dormant market for those investments.
To contact the reporter on this story: David M. Levitt in New York at [email protected].
Last Updated: May 7, 2009 13:41 EDT
Source: http://www.bloomberg.com/apps/news?p...vkU&refer=home
Cheers
Marc