CMBS Deliquency UP UP UP
CMBS vacancy has risen dramatically over the last year to a record 8% in April according to the most recent Trepp Wire. Lodging and multifamily lead the way with the highest vacancy rate although multifamily moderated somewhat from the March vacancy level.
Overall, the can continues to be kicked down the road. Even though you won’t hear much about it in the main stream media, increasing defaults are foreclosures are looking more likely. The situation remains that many CMBS issues from 2005-2008 are going to have difficulty qualifying for refinancing without equity injections because of both tighter underwriting standards and declining cash flows.
Interestingly most banks, decided to reduce loss reserves in the prior quarter. Seems like the debt party is coming whether the issuers like it or not.
Tags: cmbs deliquency, commercial real estate debt, debt reserves, loan losses Posted in
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