Delinquency on securitized commercial real estate loans climbed nearly 17 basis points last month. In addition, the rate could go higher if conditions in the commercial mortgage lending market don’t improve.
One-month delinquency on loans included in commercial mortgage-backed securities was 8.346 percent in October.
The statistics were released Tuesday by Morningstar Research.
The late-payment rate climbed for the second consecutive month and was up from 8.182 percent in September.
The balance of delinquent CMBS loans was $61.2 billion as of October, up from the prior month’s $60.2 billion.
Morningstar noted that total outstanding CMBS loans fell to $734.2 billion from $736.0 billion in September.
Last month’s CMBS loan liquidations amounted to 128 loans for $1.3 billion. The loss severity on the liquidations was 48.8 percent.
On the $574.5 billion in conduit and fusion deals seasoned for at least a year, the delinquency rate climbed to 10.14 percent from 9.96 percent.
“A denial of borrower requests for loan modifications or debt restructuring by the special servicers, or a decision by borrowers to surrender the collateral, is a legitimate concern heading into 2012,” the report stated. “Based upon this concern and despite the recent liquidation activity experienced over the trailing 12-months, the delinquent unpaid balance for CMBS still has the potential to grow higher than 9 percent in 2012.”
In addition, Morningstar warned that the lack of a credit recovery combined with maturing balloon loans could combine to easily surpass 9 percent delinquency.
