Finance CMBS
Fitch: CRE Losses to Increase into Next Year
Oct 22, 2009
Good news in the commercial real estate world seems to be in short
supply these days. In a study released earlier this week by Fitch
Ratings, they’re indicating that losses will increase this year and
next for the U.S. CMBS.
RCA: Recovery Rate on Defaulted Loans Only 60%
Oct 19, 2009
It comes as no surprise that lenders continue to be plagued by
commercial mortgage defaults and, according to a recently released U.S.
Capital Trends report by global research and consulting firm Real
Capital Analytics, the recovery rate on these troubled loans is just 60
percent.
Distressed Debt Sales Likely to Soar
Oct 15, 2009
Like moths to a flame, investors these days are forming around what
some believe could be the biggest distressed debt sales market since
the days of the U.S. savings and loan crisis, according to a recent
Ernst & Young survey.
Economy Watch - Foreclosure Efforts Not Paying Off?
Oct 12, 2009
Is the federal effort to forestall residential foreclosures all the administration is cracking it up to be? As reported by CPE,
late last week the U.S. Treasury Department was trumpeting 500,000 as
the number of homeowners who have had their mortgage payments
(temporarily) lowered under the Making Home Affordable program, which
began earlier this year.
Multi-family Leads CMBS Delinquency Rise
Oct 07, 2009
The CMBS delinquency rate ended August at 3.73 percent, up 24 basis points from July and 239 percent since the beginning of the year. Fewer General Growth Properties (GGP) loans were reported as delinquent in August (12 loans) than July (21 loans) or June (52 loans). Excluding GGP-related delinquencies, the August delinquency rate is 3.53 percent—following two consecutive monthly increases of 11 percent.
Multi-family saw the largest increase in delinquencies among the commercial property types, rising to 6.02 percent on $1.2 billion in new delinquencies. Contributing to the increase were three large multi-family loans: the Bethany Phoenix Portfolio ($164.5 million principal balance) in LB Commercial 2007-C3, the Babcock & Brown FX loan ($157.4 million) in CSFB 2006-C2 and the Trilogy Apartments loan ($135.6 million) in Bear Stearns 2005-POWER 9.
Economy Watch: What the Fed Wants
Oct 02, 2009
Ahead of the report on Friday about unemployment from the U.S.
Department of Labor, from which no one is expecting particularly good
news, various members of the Federal Reserve were on the speaking
circuit talking about the economy and the role of the Fed.
Economy Watch: Mortgage Delinquencies Rise Again
Oct 01, 2009
The U.S. Office of the Comptroller of the Currency reported on
Wednesday that 5.3 percent of all residential mortgages that it tracks
(about 64 percent of the outstanding total nationwide, or about $6
trillion in principal balances) were seriously delinquent, or more than
60 days behind, in 2Q09. That’s up from 4.8 percent during the first
quarter of the year, and up from 3 percent a year ago.
CRE Mortgage Debt Drops in Q2, But News Not All Good
Sep 25, 2009
The overall level of outstanding commercial and multi-family mortgage
debt decreased in the second quarter, according to the Federal Reserve.
But despite the drop, the news was not all good, and many significant
issues remain to be worked out in the debt market.
Economy Watch - IRS Changes Rules for Securitized Loan Modification
Sep 21, 2009
From the nether reaches of the Internal Revenue Service a new tax rule recently emerged (Revenue Procedure 2009-45), the effect of which will be to let real estate borrowers pursue possible modifications to securitized loans--ones that are at risk of default--without triggering tax penalties. Previously, administrative tax rules imposed severe penalties for changes made to commercial mortgage pools or investment interests after the startup date of the securitization vehicle. This naturally had the effect of keeping borrowers mum until default had actually occurred or was nigh.
Safe Haven from CMBS Delinquencies?
Sep 17, 2009
There is a growing concern among economists regarding the $685 billion commercial mortgage-backed securities market and the tremendous risks it holds for the commercial real estate industry as well as the general economy. Real estate investment trusts may provide a relative safe haven from this looming threat.
Less Distress?
Sep 02, 2009
TALF – the Term Asset-Backed Securities Loan Facility – is the
government’s premier program to help liquefy the credit markets for
commercial real estate. Yet TALF and its cousin, PPIP – the
Public-Private Investment Program, address CMBS, not whole loans, which
are the bigger problem, at least in terms of outstanding debt. CMBS and
other securitized loans account for 21 percent of outstanding CRE debt
according to the Mortgage Bankers Association, while commercial banks,
which make whole loans, account for about 45 percent.
Economy Watch - More REIT IPOs Hatched
Aug 31, 2009
More REIT IPOs are in the works, with the filing of the necessary
documents with the Securities and Exchange Commission by Brookfield
Realty Trust and Marathon Real Estate Trust on Friday for entities that
will invest $500 million and $300 million in various kinds of debt.
Brookfield said it will use the money to originate and buy mortgage
loans, and mezzanine loans, and possibly CMBS. As for Marathon, it will
go shopping for MBS, mortgage loans and other real estate-related loans.
Economy Watch - Case-Shiller Index Sees Another Uptick
Aug 26, 2009
Is this the bottom? For sure? Everyone in the housing industry, and a
lot of other people besides, are probably asking that question after
the release of the latest S&P/Case-Shiller index report on Tuesday.
The index, which measures home prices in 20 major metro areas, ended
June up 1.4 percent, turning in a second monthly gain in a row. Prices
were up in 18 out of the 20 metro areas, and it was the second monthly
increase in the index since the mid-2006, just before the bubble popped.
Capital Markets Showing Some Signs of Life
Aug 25, 2009
Strong interest in public markets and the slow but steady return of
securitization provide some indicators that relief in the commercial
real estate market may be on the way, according to the latest capital
markets report by Cushman & Wakefield Sonnenblick-Goldman.
Stormy Weather for Hospitality CMBS
Aug 25, 2009
It is hardly news that the hospitality market has been probably the
hardest-hit sector of the commercial real estate industry during the
credit crunch and subsequent economic downturn. As key fundamentals
continue to sag, the sector's difficulties are starting to spill over
into the CMBS arena--a contagion that should be cause for concern to
any student of recent history, given the role that mortgage-backed
securities played in the single-family sector's well-documented
meltdown.
Low, but Still Rising
Aug 20, 2009
CMBS delinquencies increased sharply in June, as 52 General Growth Properties Inc. loans with a trust principal balance of $6.3 billion became delinquent. The delinquency rate ended the month at 3.95 percent, up from 2.60 percent in May. Without the General Growth loans, June’s delinquency rate would have been 2.85 percent. Excluding the General Growth loans, the rate of delinquency growth in June slowed from year-to-date monthly levels. The delinquent balance of $24.09 billion in June includes approximately 28 percent of General Growth loan collateral. The delinquency rate for the retail sector more than doubled in June to 5.95 percent from 2.86 percent in May. The delinquency rate for the lodging sector also increased significantly, jumping to 4.49 percent from 3.20 percent, as loan collateral from the Red Roof Inn motel chain contributed $361.4 million of new lodging delinquencies.
Economy Watch - TALF Gets Longer Life
Aug 18, 2009
The real estate securitization business, which has had enough problems
lately, got a bit of good news on Monday when the Federal Reserve
extended the Term Asset-Backed Securities Loan Facility, better known
as the TALF. For new CMBS--the little that there is--the extension runs
through June 30, 2010, while legacy CMBS has until March 31.
Economic Update - Roundtable Survey Finds CRE in Poor Mood
Aug 06, 2009
The latest quarterly survey by the Real Estate Roundtable, released
Wednesday, found the commercial real estate sector in a funk, squeezed
by poor financing prospects, decreasing valuations and lower demand for
commercial real estate of all varieties.
Fitch Ratings: Large Hotels Defaulting on Loans at High Rate
Aug 05, 2009
As the commercial real estate market continues its downward decline, a
new Fitch Ratings report indicates that large hotels lead loans of
concern for U.S. CMBS with eight newly defaulted loans greater than
$100 million entering special servicing, according to Fitch’s 'What's
in Special Servicing' U.S. CMBS report.
More CRE Investment Projected for Remainder of Year
Aug 03, 2009
Foreign real estate investors project their investments for the rest of 2009 will substantially out-strip investments completed year-to-date,while equity investors expect they will place seven times more than current year-to-date investments, according to the results of a recent survey released by the Association of Foreign Investors in Real Estate.
Economic Update - New Home Sales See Uptick
Jul 28, 2009
New single-family home sales recorded an uptick in June, increasing 11
percent compared with May, to an annualized rate of 384,000. It looks
like a little pent-up demand for new homes is being unleashed,
especially since prices are still falling. The Commerce Department also
reported that the median price for a new house stood at $206,200 in
June, down 12 percent from last June.
Fitch Places $9B U.S. CMBS on Rating Watch Negative
Jul 27, 2009
Fitch Ratings placed 238 CMBS bonds from 33 transactions on Rating Watch Negative as part of an ongoing review of the CMBS portfolio using Fitch's updated surveillance criteria, it reported on Friday. However, the ratings agency said it expects the status to be resolved over the next 90 days as it evaluates transactions issued between 2006 and 2008.
Economic Update - CMBS Delinquencies Spike
Jul 14, 2009
U.S. Commercial mortgage-backed securities delinquencies grew in June
by a record $2.2 billion, according to Fitch Ratings. Last month there
was a 2.6 percent delinquency rate among U.S. CMBS, up 48 basis points
from the previous month. In June, at least, problems in retail
properties and the hospitality industry inspired much of the upward
bounce in delinquencies. But there's more to come, especially in the
beleaguered hotel sector.
Ginne Mae Issues $43B of MBS in June
Jul 14, 2009
The Government National Mortgage Association issued more than $43 billion in mortgage-backed securities in June, bringing its total for the first six months of 2009 to nearly $107 billion.
Economic Update - Tesco Completes Sale-Leaseback, CMBS Deals
Jun 22, 2009
British retailer Tesco Plc. inked a sale-leaseback of 14 properties. The sale-leaseback followed on the heels of the company's successful
completion of the sale of commercial mortgage-backed securities. The offering by Tesco may mark the glimmering beginnings of a new, simpler CMBS market.
MBA: Outstanding Mortgage Debt Remains Unchanged in First Quarter
Jun 19, 2009
The level of commercial mortgage debt outstanding remained relatively unchanged in the first quarter, at $3.48 trillion, according to the Mortgage Bankers Association analysis of the Federal Reserve Board Flow of Funds data. The $3.48 trillion in commercial/multi-family mortgage debt outstanding recorded by the Federal Reserve was a decrease of $33 million from the fourth quarter of 2008. Multi-family mortgage debt outstanding grew to $908 billion, an increase of $5 billion, or 0.6 percent from the fourth quarter.
Economic Update - Recovery or Continued Slowdown?
Jun 17, 2009
Is the economy picking up or continuing to struggle? It seems to depend upon who you talk to and when you talk to them. While many reports gave a variety of accounts Tuesday, most supported bets that the pace of the recession is slowing.
CRE Investment Finance's Sea Change
Jun 12, 2009
It's been nearly two years since the lending market for commercial real estate investment began to freeze up--first a freeze, then a full-stop for a short period in the dark days of the fall of 2008, then a "new normal" of sluggish lending, tough underwriting standards and all-around financial miasma. No one knows how long the new normal is going to last, or whether it represents a pendulum that's moved too far away from the days of easy lending that will someday swing a little ways back.
Economic Update - CRE Defaults Head for High Ground
Jun 10, 2009
A new report by Real Estate Econometrics, based on FDIC data, puts thecommercial real estate loan default rate at its highest level in morethan a decade and a half, at least those loans held by regulateddeposit-taking institutions—banks and thrifts, for the most part. Thedefault rate soared from 1.62 percent in the last quarter of 2008 to2.25 percent in the first quarter of 2009. That rate doesn’t includedefaults on loans associated with multi-family rental properties, whichReal Estate Econometrics put at 2.45 percent in the first quarter of2009, up 68 basis points from the previous quarter.
M-F Mortgage Delinquencies Increase in Q1, Says MBA
Jun 03, 2009
The weakening economy and continued credit crunch led to increases incommercial/multifamily mortgage delinquencies during the first quarter of 2009, according to the latest Commercial/Multifamily DelinquencyReport, released by the Mortgage Bankers Association.
Fitch: General Growth Chapter 11 Ruling a Mixed Blessing for Bondholders
May 26, 2009
The special-purpose entity structure that has helped to power real
estate finance in recent years remains intact after recent court
decisions tied to the General Growth Properties Inc. Chapter 11
bankruptcy filing. However, the rulings may turn out to be less than a
total victory for bondholders in the long run.
Economic Update - Legacy CMBS Now Under TALF
May 20, 2009
In a major expansion of the Term Asset Backed Securities Loan Facility (TALF), the Federal Reserve said on Tuesday that investors will be able to buy existing securities backed by commercial real estate loans--so-called "legacy" CMBS. The commercial real estate industry has been pushing for this for some time, and it will at last be possible starting in July.
Stimulus Programs, Financial Market Intervention to Benefit CRE--But Not Right Away
May 19, 2009
The government's pumping up of the economy via various programs created by the nearly $800 billion economic stimulus package and interceding in the financial market will indirectly incite the revival of the commercial real estate market, according to a new report by Marcus & Millichap Real Estate Investment Services. But the major impact is unlikely to be felt this year.
Economic Update - AIG Unloads Choice Tokyo Property for $1.2B
May 12, 2009
American International Group is finally in the news for something other than being a multibillion-dollar black hole for the U.S. Treasury; namely, a property sale. The beleaguered insurer has inked a deal to sell the AIG Otemachi Building and a one-acre site in Tokyo to Nippon Life Insurance Co.
Economic Update - The Week Starts with Some Good News
May 05, 2009
Is that the glimmer of good economic news ahead, or just a mirage? Time
will tell, but for the moment it's good to know that the pending home
sales index rose 3.2 percent in March when compared with February, and
1.1 percent when compared with the same month a year ago, according to
the National Association of Realtors.
CMBS Sector Sees Jump in Special Servicing Loans
May 04, 2009
CMBS loan delinquencies and defaults are pushing up special servicing
volume at a blistering pace, according to a pair of first-quarter
updates published last week by Fitch Ratings.
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