Industry News


Trepp CMBS Delinquency Rate Drops to Lowest Level in More than Two Years
From PR newswire services, May 1, 2013.

Trepp, LLC, the leading provider of information, analytics and technology to the CMBS, commercial real estate and banking markets, released its April U.S. CMBS Delinquency Report. The delinquency rate for U.S. commercial real estate loans in CMBS fell 47 basis points to 9.03% in April – the lowest since November 2010. Moreover, in a significant departure from the upward movement in March, April's numbers log the biggest one-month drop in the delinquency rate since 2009 when Trepp began releasing its report. A confluence of factors contributed to significant downward pressure across the board. Loan resolutions of $1.6 billion, payoffs of $800 million, and loans that cured as a result of several large loan modifications put downward pressure of 80 basis points on the rate. Additionally, newly delinquent loans were well below previous months' averages, lessening the upward pressure the market has experienced in the early months of 2013




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Retail Credit Quality Will Strain as CMBS Issuance Surges
News from the Commercial Observer May, 2013

Fueled by investors’ renewed appetite for risk and the relative stability of bond yields, CMBS issuance in 2013 is pacing far ahead of last year. By early May, volume had surpassed $30 billion, roughly three times the 2012 year-to-date tally. An uptick in the number of well-qualified borrowers is only part of the story. As it expands, the credit quality of the larger underlying pool shows signs of an increasingly flexible approach to underwriting. Too many investors are unfazed by the credit drift, largely content that anchoring to existing cash flow obviates risk along other dimensions. Fitted with blinders, those investors run the chance of being outflanked by new drivers of loss, including inadequate cushions against rising interest rates. As the cyclical attention to risk dissipates, a longer list of ratings agencies in the post-crisis era still brings fresh perspectives to the marketplace. It has also invited a new round of ratings shopping.




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DebtX: CRE Loan Prices Rise Again in April
From Business Wire, May, 2013

Loan prices in the CMBS universe and at DebtX rose again in April, according to DebtX, the largest marketplace for loans. The market continues to demonstrate strong technical foundations across all segments of commercial real estate finance.Prices for CMBS loans and secondary market transactions remain at or above their historical highs, said DebtX Managing Director Will Mercer. The market continues to demonstrate strong technical foundations across all segments of commercial real estate finance.




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Morgan Stanley Skips CMBS, Syndicates Loan
From Commercial Mortgage Alert, May, 2013.

Switching gears, Morgan Stanley has syndicated a $240 million fixed-rate mall loan, rather than securitizing it. Morgan Stanley divided the 12-year loan into two pieces and placed them separately with Cornerstone Real Estate and New York Life. The mortgage is backed by the 1.2 million-square-foot Valley Plaza Shopping Center, a mall in Bakersfield, Calif., that is owned by General Growth Properties of Chicago. When Morgan Stanley wrote the loan on Feb. 11, it planned to securitize it via a stand-alone deal. But the commercial MBS market was subsequently flooded with single-borrower transactions backed by mall paper, causing spreads to blow out. Morgan Stanley met pricing resistance in March on the stand-alone securitization of another loan it had written for General Growth. That $160 million mortgage was backed by the 1.1 million-sf Altamonte Mall in the Orlando suburb of Altamonte Springs, Fla. Price talk for that offering wasn’t distributed, but investors and CMBS traders at rival shops said the spreads were wider than expected. A $74.4 million triple-A class with an 11.9-year average life was priced to yield 3.64% — barely inside the 3.72% loan coupon. The yields on four subordinate classes totaling $63.1 million were unclear, but presumably exceeded the loan coupon if Morgan Stanley didn’t retain.




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