Between a Rock & a Hard Place
Here are the Highlights:
- Speed of deterioration in loan performance is unprecedented, even with
relative to early 1990s - Total delinquency rate reached 4.1% in June, 2.2 times higher than in March
and 3.5 times higher than December - Delinquency rates likely to soar higher over next 24+ months on billions of
dollars of pro forma loans that never stabilized and resetting partial IO loans - With 2,158 delinquent fixed rate loans ($27.9 billion) special servicers may
soon be overwhelmed - DB CMBS Research projects term losses will reach 4.3-6.3% for the
outstanding CMBS universe ($31.3-$46.4 billion), and 8.4-12.1% for the 2007
vintage - Massive maturity default risk
- 64.4-72.5% of loans (400-$450 billion) would not qualify to
refinance were they to survive until maturity - With well over $2 trillion in commercial mortgages maturing between now and
2013 in CMBS, banks and life company portfolios, the scale of the potential
problem is formidable - These problems are not the result of dislocated financing markets, rather they
reflect the simple fact the majority of loans do not qualify for a loan large
enough to retire the existing debt - Improvements in rents and vacancy rates are extremely unlikely to be
sufficient to materially affect the scope of the problems
For the full report, click here.
