Archive for June, 2009

MBA: Commercial/Multifamily Delinquencies Continue to Rise

Delinquencies on commercial and multifamily mortgages are now at their highest point since the 2001 recession, according to the Mortgage Bankers Association’s quarterly survey. Below is a paragraph from the MBA’s release as well as the 10-page report.

Between the fourth quarter of 2008 and first quarter of 2009, the 30+ day delinquency rate on loans held in commercial mortgage-backed securities (CMBS) rose 0.68 percentage points to 1.85 percent. The 60+ day delinquency rate on loans held in life insurance company portfolios rose 0.05 percentage points to 0.12 percent. The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.04 percentage points to 0.34 percent. The 90+ day delinquency rate on multifamily loans held or insured by Freddie Mac rose 0.08 percentage points to 0.09 percent. (Note that in June 2008, Freddie Mac began reporting multifamily delinquencies as those loans 90+ days delinquent. Prior to that time the reported numbers are for loans 60+ days delinquent). The 90+day delinquency rate on loans held by FDIC-insured banks and thrifts rose 0.66 percentage points to 2.28 percent.

1Q09CommercialNDR

CNBC: Jonathan Litt Discusses REIT Outlook


(Hat tip, Deal Junkie)

Oilily Files for Bankruptcy, Has Closed 8 Stores

Oilily USA, which owes money to over 200 creditors, cited assets between $1 million and $10 million, along with debts of more than $10 million.

After closing eight retail locations over the last few months, Oilily is attempting to renegotiate its remaining 25 leases nationwide.

“The good news is we have no secured creditors, we have cash, and we intend to stay in operations and successfully emerge from Chapter 11,” said Marilyn Simon, the lawyer handling bankruptcy proceedings for Oilily. She explained that the bankruptcy filing of the parent company contributed to a downward spin for Oilily’s U.S. arm, but after a restructuring, the company aims to survive independently of Oilily B.V.

Link.

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Weekend News & Notes

Here are some news and notes on retail and retail real estate from around the Web over the weekend.

  • According to the Dallas Morning News Blockbuster says it remains committed to brick-and-mortar stores. The company has been refurbishing locations. It’s relabeling its locations “Blockbuster Media” rather than “Blockbuster Video”.
  • Bloomberg reports that Starbucks is pushing its landlords to grant 25 percent reductions in its leases.
  • The Chicago Tribune reports on Sears’ latest gambit–a concept called MyGofer, a drive-through general store that is supposed to be a marriage between online shopping and bricks and mortar. There’s some more information on the concept at Sears’ site.
  • BNET Retail details how Best Buy execs are attempting to push the firm internationally.
  • Deal Junkie argues that access to commercial credit is not frozen. He’s correct in the sense that non-CMBS lenders are still out there and doing deals. He expanded on that post here, looking at Treasury Department data. However, what lenders tell us is that underwriting requirements have changed and they’ve become much more conservative in loan-to-value ratios. Further, those lenders aren’t moving to aggressively pick up the market share that the CMBS sector took in recent years. Also, CMBS may account for only 25 percent of the roughly $3.5 trillion in total outstanding commercial real estate debt, but in recent years conduit lenders represented more than 25 percent of the market. This chart shows the volume of overall commercial real estate debt by type expiring year by year. Yes, many lenders remain active. But something has to replace the lost CMBS volume and traditional lenders are not stepping up their activity enough to fill that breach.
  • According to Calculated Risk, the CMBS market lost $75 billion in market capitalization in two days after the S&P request for comment on changes to their U.S. CMBS rating methodology was issued.
  • Time is the latest entrant in the mainstream media’s recent spate of “commercial real estate is doomed” stories.
  • Three Reuters stories are of interest to the sector. Credit Suisse has downgraded the U.S. mall anchor sector. Some retailers are taking advantage of the lull in sales in the U.S. to prep international pushes. Lastly, here’s a recap of the latest in GGP’s bankruptcy. Some lenders are fighting the inclusion of some properties in the filing.

Zell: CRE Demise Overstated

Bloomberg interviews Sam Zell in a very long segment. He starts talking about the residential sector and says he thinks “its slowly working its way through the morass” and about to get better. In briefly talking about commercial real estate, Zell thinks it will take two or three years before investment sales volumes pick up.