Online auctions could revive stalling CMBS delinquency rate

US CMBS delinquency rates stalled last month after a 13-month free fall, but experts said they could bounce back with the help of upcoming online property auctions. Research and data group Trepp said the overall US CMBS delinquency rate decreased by just one basis point in July, to 6.04%, after a year-to-date drop (through June) of […]

US CMBS delinquency rates stalled last month after a 13-month free fall, but experts said they could bounce back with the help of upcoming online property auctions.

Research and data group Trepp said the overall US CMBS delinquency rate decreased by just one basis point in July, to 6.04%, after a year-to-date drop (through June) of 138 basis points.

Auction-PortalLoan resolutions totaled just over $600m in July, making it one of the lowest monthly totals in the last few years. The previous 12-month average was $1.3bn.

But Trepp research analyst Joe McBride and a report from Fitch Ratings said that upcoming property auctions could bring further rate declines.

“There was a definite slowdown [in July], but it may be that servicers are getting ready for another round of loans that are coming up on auction,” he told Real Estate Capital.

In a separate report, Fitch Ratings said the 15-month streak of falling delinquency rates it recorded among CMBS it rated ended in July, with the rate standing still at 4.87%.

But Mary MacNeill, managing director at Fitch, noted in a written statement that the rate could fall “at least another 10 [basis points] in the months ahead as properties listed on online marketplaces are sold.”

A Fitch report pointed to $415m of assets in Fitch-rated deals listed on Auction.com, including the $170m COMM 2006-C8 and $165m MLCFC 2007-9.

The growing role of the online auction sites in unloading distressed loans and assets is unmistakable. But the process could soon come under heavier scrutiny. New York state regulators last month were mulling a probe into potential conflicts of interest between special servicers selling loans on the sites that also have investment arms looking to buy them, Reuters reported.

Resolutions in July were led by the $36.7 million Cornerstone Commerce Center (CSMC 2007-C5), which was disposed of for a 41% loss; and the largest new delinquency in July was the $31.4 million BB&T Tower, JPMCC 2007-LDP12, which failed to pay off at its July 9, 2014 maturity, according to Fitch.

 

 

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