Commercial Property Loan Delinquencies Down

It’s 2009, so I say it’s time for nothing but good news. Well, I won’t actually hesitate to talk about the bad things that are happening in the real estate and credit markets (and there is going to be a lot more bad news). I will, however, always make sure to see the glass as being “half full,” just because that’s my overall approach to business…and life.

So, on this second day of the new year, I’m happy to report - courtesy of a City Biz List release - that commercial property loan delinquencies are down. From the release:

Delinquencies for U.S. commercial real estate loan (CREL) CDOs fell 33 basis points (bps) to 2.80% for November 2008 from 3.13% in October 2008, representing the first decline since July, according to Fitch Ratings. Fitch currently rates 35 CREL CDOs encompassing approximately 1,100 loans and 370 rated securities/assets with a balance of $23.8 billion.

‘The continued lack of available capital is driving maturity defaults of CRE loans,’ said Senior Director Karen Trebach. ‘However, asset managers are continuing to extend many of these loans, with the extension of two large performing matured balloon loans leading to the net decline in this month’s CREL DI.’

Asset managers reported 45 new loan extensions this past month compared to 35 in October. Due to the short-term nature of the loans in CREL pools, Fitch anticipates an average of 40 extensions per month to be exercised going forward, or 3.5% by number of loans in the CREL CDO universe.

For those investing in commercial properties, whether small residential properties or massive downtown skyscrapers, it seems that things are looking up, as lenders are extending much of the “relief” to commercial borrowers that their residential counterparts are seeing for their home mortgage loans.