U.S. CMBS Delinquency Rate Rise Again, REOs Reach $11B

New data from Fitch Ratings shows that the volume of real estate-owned (REO) assets for lenders reached $11 billion in April, a new market record, representing one third of all outstanding delinquencies according to Fitch Ratings. The current and prior month delinquency rates for each of the major property types are:

• Multifamily: 11.64% (12.61% in March)
• Hotel: 10.20% (10.35% in March)
• Industrial: 9.34% (10.91% in March)
• Office: 8.36% (7.99% in March)
• Retail: 7.39% (7.23% in March)

A closer look reveals stark differences in REO trends by state, according to a Costar Group report. In states where non-judicial (power-of-sale) foreclosure is allowed, the inventory of REO assets increased by 64% since the start of last year. Conversely, the inventory in judicial-only states (where the foreclosure process can be notably slower) jumped by 111%. For the current inventory of REO assets, it took an average 179 days to foreclose on properties in power-of-sale states, versus 323 days in judicial-only states. This suggests that the current REO inventory from judicial-only states represents older stock that is finally making its way through the system.

For more news and information visit Blumberg Capital Partners.

Fitch Ratings Shows Fewer CMBS Due in 2012

Fitch Ratings has released their latest finding on the U.S. commercial mortgage backed securities (CMBS) sector with some encouraging news for the coming year as fewer loans are coming due in 2012. In transactions rated by Fitch, approximately 1,200 commercial mortgage loans totaling $17.3 billion are scheduled to mature in 2012, representing a sizeable drop compared to 2,000 loans totaling $22.5 billion that matured in 2011. The largest concentration of maturing loans in 2012 will come from loans secured by office properties, representing 38% of impending maturities reported the Wall Street Journal.

Fitch continues to expect the majority of loans to payoff at maturity despite the short term volatility of the capital markets. "Most maturing loans, particularly those from earlier vintages, benefit from stable performance and years of scheduled amortization, which make them more easily financeable in today's market," said Adam Fox, Senior Director at Fitch Ratings. The most challenging loans to refinance are those that were originated in 2007, the peak of real estate values. "Borrowers will likely need to contribute additional equity to secure financing for five-year loans."

For more news and information visit Blumberg Capital Partners.

Fitch Report Shows US CRE Delinquencies Eased in October

According to Fitch Ratings the delinquencies on U.S. commercial real estate loans eased in October due to increased incidence of loan extensions. The exentions helped precipitate a slight drop in CREL CDO delinquencies and, as Fitch Director Stacey McGovern explained,"are short term remedies designed to allow added time for further negotiation of pending loan modifications."

CREL CDO delinquencies fell slightly to 12.8% last month (from 12.9% in September). Total loan extensions in October were reported at 58 in the month, which is significantly higher than the 2010 monthly average of 37 extensions. Asset managers reported $98 million in realized losses from the disposal of distressed assets last month. Total realized losses across such products rated by Fitch total more than $1.7 billion. "The risk still remains for realized losses to increase if real estate trends backpedal, though they have been in a relative holding pattern for the last few months," McGovern added.

For more news and information visit Blumberg Capital Partners.