CMBS Delinquencies 8.39% in October, $3.45 billion became newly delinquent

Total balance of delinquent loans increased

by approximately $627 million to $52.7 billion.

New York, November 10, 2010 -- The delinquency rate on loans included in US Commercial Mortgage-Backed Securities (CMBS) conduit/fusion transactions increased 15 basis points in October to 8.39%, according to Moody's Investors Service's Delinquency Tracker (DQT). The increase was almost the same as the 14 basis point increase in September and the fifth consecutive month of modest growth in the rate.

In October, 282 loans totaling $3.45 billion became newly delinquent, while 211 previously delinquent loans totaling approximately $2.82 billion became current, worked out, or disposed. In all, the total number of delinquent loans increased in October to 4,042, and the total balance of delinquent loans increased by approximately $627 million to $52.7 billion.

One trend that has restrained the delinquency rate is the increasing number of loans that have left delinquency. In the four months July through October, $12.8 billion in loans became current, worked out, or disposed, more than the $12.6 billion for the preceding six months, January through June.

"The increased pace of loans leaving delinquency has helped moderate the delinquency rate, but the potential for monthly spikes continues to exist due to the large number of troubled CMBS loans on the watchlist and in special servicing," said Moody's Managing Director Nick Levidy.

Moody's Delinquency Tracker (DQT) tracks all loans in US conduit and fusion deals issued in 1998 or later with a current balance greater than zero.

By property type, hospitality properties had the greatest increase in delinquency rate in October, gaining 45 basis points to 16.39%, the highest of the five core property types.

At 35 basis points, multifamily experienced the next highest gain, its delinquency rate ending October at 13.77%, the second highest rate. Sixty-seven percent of all delinquent multifamily loans by balance in the East region are backed by New York City pro-forma rent conversion properties.

Retail saw the greatest net overall increase in total delinquency balance, with $427 million being added in October, which increased its rate 27 basis points during the month to 6.87%.

Office properties had a 12 basis point decrease in delinquency rate during October, which brought the rate to 6.28%. The delinquency balance shrank during the month by $275 million, the only time in 2010 that the balance has declined for office properties.

Industrial properties also saw a decline in delinquency rate, as it slipped 9 basis points during October to 6.23%.