Trepp expects a 60 basis point drop in November’s US CMBS delinquency rate thanks to the anticipated resolution of a $3 billion securitized loan tied to Blackstone’s purchase of Stuyvesant Town-Peter Cooper Village.
Blackstone and partner Ivanhoe Cambridge agreed last month to pay $5.3 billion for Manhattan’s largest apartment complex after striking a deal with the city of New York regarding affordability guidelines for its 11,232 units.
The deal will resolve the existing $3 billion loan backing the apartment complex, according to Trepp, which could flip multifamily CMBS from being the worst performing asset class — with a current 8.18% current delinquency rate — into the best performing.
Tishman Speyer paid $5.4m for the massive property in 2006, but with just $112m of its own equity. The loan, made at the height of the lending boom of 2007, was underwritten to give borrowers credit for the future conversion of rent stabilized apartments to market rents, resulting in its ultimate default and foreclosure when the crisis hit.
The huge drop in the delinquency rate would be a stark contrast to months of subtle jumps. The Trepp CMBS Delinquency Rate decreased for a second straight month, falling by five basis points to 5.23% in October, Trepp said in its report. The rate is now 52 basis points lower year-to-date and 91 basis points lower than the year-ago level.
In October, $1.4 billion in loans became newly delinquent, puting 27 basis points of upward pressure on the delinquency rate. More than $400 million in loans were cured last month, pushing the rate down nine basis points; and previously delinquent paid off with a loss or at par totaled almost $1.2 billion, moving the rate down by 23 basis points. Hence the five basis point decline.
The industrial delinquency rate moved up 10 basis points to 6.28% in October; lodging improved by 11 basis points to 3.17%, remaining the best performing major property type. The office delinquency rate fell 11 basis points to 5.70% and the retail rate inched one basis point lower to 5.72%.
As first reported in Real Estate Capital, Blackstone is seeking $2.3bn in additional debt on the Stuy Town acquisition.