Delinquencies on mortgages that underlie commercial mortgage-backed securities (CMBS) rose by $1.63 billion in May, pushed up in part by the bankruptcy of General Growth Properties Inc (GGWPQ.PK), according to rating agency Realpoint.
The amount of delinquencies, up for the ninth straight month, rose to a 12-month trailing high of $18.78 billion out of a total unpaid balance of $835.4 billion of CMBS pools Realpoint had under review at the end of May, the rating agency said on Thursday.
The rising tide of delinquent loans reflects the weakening of U.S. commercial real estate and inability of borrowers to refinance maturing loans, and results in large part from the loose lending that underscored the frenzied real estate sales of 2005 through early 2007.
The delinquency amount compares with $4.01 billion a year earlier.
Loans in special servicing increased in May by an unprecedented $12.53 billion to a trailing 12-month high of $37.05 billion, Realpoint said.
When loans are in imminent default, they are typically transferred from a master servicer, who oversees performing loans in CMBS trusts, to a special servicer, who cares for troubled loans, usually at a substantial fee.
Most of the increase, about $7.33 billion was due to the transfer of loans on malls owned by General Growth, which filed for Chapter 11 bankruptcy protection in late April. Retail real estate comprised 42.8 percent of the assets in special servicing because of General Growth. Retail real estate surpassed multifamily, which made up 23.4 percent of the specially serviced pool.
The percentage of loans in special servicing rose to 4.49 percent of all CMBS unpaid balances from 2.95 percent the prior month.
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