Commercial mortgage delinquencies hit all-time high in March on big New York deal collapse

Commercial mortgage delinquencies spike in March

NEW YORK — The delinquency rate for commercial mortgage-backed securities posted its largest increase ever in March, Moody’s Investors Service reported Wednesday, blaming most of the gain from the collapse of a $5.4 billion housing deal in New York.

The ratings agency said that the rate rose 69 basis points in March, a $4.3 billion increase as 343 loans became delinquent.

But 45 of the basis points were attributable to the loan for the Peter Cooper Village and Stuyvesant Town housing project in Manhattan. A $3 billion loan for the development moved into delinquency in March.

The project, which would have been the most expensive real estate deal in U.S. history, fell apart in January when a developer team could not make a $16 million loan payment. The team, led by Tishman Speyer Properties and BlackRock Realty, turned the 110 buildings that make up the complex over to creditors, saying it was the only alternative to bankruptcy.

Commercial mortgage backed securities have suffered with the sharp downturn of the market for properties like offices, retail centers and multifamily housing.

Moody’s wrote that some sectors have shown some signs of life, such as loans for multifamily projects and hotels. The rate of increase in delinquencies has slowed in recent months. But the rate of increase for projects like office and real estate continues to rise unabated.

“We expect this trend to continue,” said Moody’s managing director Nick Levidy.

Even with the Peter Cooper Village default, the eastern region remains the best-performing part of the country. The south holds the largest percentage of delinquent loans.