CRE & CMBS loans Accelerating Their Defaults
By: Myles, May 7th, 2009
At MarylandCommercialTitle.com we pride ourselves on finding the data that lies well below the radar. Bingo. Here is a data point that you will not see in the mainstream media. And more importantly, this is powerful information that you can (and should) use to guide your business and investment decisions moving forward.
Just posted in ZeroHedge.com we see — contrary to the positive headlines with the green shoots and mustard seeds and the burgeoning stock market over the past two months– the devolving of Commercial Real Estate market. Once again the CRE market has hit a new high (or low), depending on your perspective.
Real Point is reporting that CMBS loans are accelerating their special servicing deterioration yet again. The total amount of CMBS in special servicing has hit $24 billion, after a staggering $3.8 billion increase in April 2009.
April 2009 marked the third straight month in which more than $2 billion of loans were transferred to special servicers, in a sign of continued market weakness. Loans get shifted when they become delinquent or are at great risk of becoming delinquent. With lending markets remaining muted, an increasing number of loans are being shifted because they’re unable to refinance before they mature.
The number of loans in special servicing has also breached a milestone, hitting 2,062 loans last month, up 237 loans from the previous month.
Not surprisingly, the bulk of weakness continues to be in the 2005-2007 vintage (the very vintage that, to CMSA’s chagrin, was excluded from the most recent amendment of TALF).
Most frighteningly, the special servicer total excludes the impact from bankrupt GGP, which as Zero Hedge previously noted, put 164 properties in bankruptcy, and according to BofA, $14.8 billion of CMBS loans are backed by GGP properties.
Assuming at least half of these loans become “special serviced” the CRE landscape is about to get a much more bloody shade of burgundy.
Tags: CMBS, commercial real estate
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