Commercial mortgages packaged into bonds during the market’s peak in 2007 are missing out on the U.S. real-estate recovery, with a delinquency rate of 14.6 percent, according to Trepp LLC.
That compares with an average delinquency rate for the overall market over the past 12 months of less than 10 percent, the data provider said today in a report. The amount of payments past due has been declining since reaching a record 10.34 percent in the middle of 2012, falling to 9.42 percent last month, according to New York-based Trepp.
Loans from the boom era are struggling even as commercial property values have recovered 33 percent since bottoming in January 2010, according to Moody’s Investors Service. Debt servicers are reworking terms and selling off distressed buildings, pushing down the overall delinquency rate, though the percentage of 2007 mortgages that are behind on payments is stuck in the double digits, according to Trepp.
The largest loan to sour this month was a $190 million mortgage on the Renaissance Mayflower Hotel in Washington, according to a March 22 report by Barclays Plc. The mortgage was modified in 2010 when the borrower received an extension, according to data compiled by Bloomberg. Rockwood Capital LLC acquired the property in 2007.
A $200 million mortgage on the hotel from a unit of Unterschleissheim, Germany-based Hypo Real Estate Holding AG was packaged into in a $3.5 billion commercial-mortgage backed securities offering by Bank of America Corp. in July 2007, Bloomberg data show. A surge in commercial mortgage bond deals this year was not enough to enable the White Plains, New York-based firm to pay off the debt that matured March 1, according to Barclays.
Sales of commercial mortgage bonds, which are linked to shopping malls, skyscrapers, hotels and apartment buildings, are poised to climb more than 50 percent to $70 billion in 2013, according to Credit Suisse Group AG. A record $232 billion was issued in 2007, Bloomberg data show.