According to a monthly delinquency report released in May by credit-rating agency Realpoint Research, the delinquent unpaid balance for CMBS increased in April by an unprecedented $3.26 billion, posting a 12-month high of $17.15 billion. (click to enlarge)
Monthly CMBS Delinquency: Balance vs. Percentage (source: Realpoint)
Overall, notes Realpoint, the delinquent unpaid balance grew for the eighth straight month, up nearly 330% on a y/y basis (when only $3.99 billion of delinquent balance was reported for April 2008), and is now over 7x the low point of $2.21 billion in March 2007.
The growing rate at which liquidated or resolved CMBS credits are replenished by newly delinquent loans remains a concern, especially regarding further growth in the Foreclosure and REO categories (evidence of additional loan workouts and liquidations on the horizon for 2009 and 2010). Through April 2009, newly reported CMBS delinquency continued to outpace monthly liquidations by a very high ratio, raising …concerns for further deterioration in the market. In April 2009, another $65.89 million in CMBS loan workouts and liquidations were reported at an overall average loss severity of 31.1%. [Realpoint]
Realpoint also emphasizes in its report the fact that it expects higher levels of loss severity to be the norm in 2009 for those loans that experience a term default where cash flow from operations will not qualify to support the required debt obligations.
In 2009 the credit-rating agency sees retail delinquency increasing substantially as consumer spending suffers from the overall weakness of the U.S. economy, and also anticipates store closings and retailer bankruptcies to continue throughout the year.
The top three states ranked by delinquency exposure through April 2009 remained consistent with the prior two months, as Texas, California and Florida collectively accounted for nearly 31% of delinquency, Realpoint said.