Tuesday, July 6, 2010

Realpoint Delinquency Report

Realpoint released their delinquency report today - guess what ?!? Delinquencies increased.

They did note that their "heavily stressed scenarios" put end of year delinquencies in the 11% to 12% range - this is similar to our most-likely-and-definitely-expect-it-to-exceed-those-levels scenario.

They have several bullet points on balloon default risk - that has been the theme in the street research the last few weeks too, but I don't see what has changed in recent months. Obviously we're going to have some real balloon default risk, especially on 5 year loans from 06/07 vintages. Next year seems like the first real tough year for maturities, and 2012 is going to be a bloodbath. Deutsche Bank was out with a report on maturities too - I haven't fully digested it yet, but the initial scan showed they noted several times that CMBS is a relatively small part of the global CRE financing marketplace. Hopefully they also note somewhere how big the maturity issues are outside of CMBS, because that seems very dire starting in 2010... Especially in the US with balance sheet loans by small & regional banks.

Big picture takeaways: Hotel really can't get much worse. Optimism seems to be the generally theme. Interest in vacant retail space is up. Multifamily starting to see a hint of improvement. Office markets expected to see growth in 2011. Loss severities >1% averaged 68%.

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