NYC Deal Brings U.S. CREL CDO Delinquencies to 13%
U.S. CREL CDO delinquencies continued their steady climb in January due in part to the ongoing troubles surrounding the Peter Cooper Village/Stuyvesant Town loan, with delinquencies increasing to 13% from 12.3% in December, according to the latest CREL CDO delinquency index results from Fitch Ratings.
Five mezzanine loans backed by interests in New York's Peter Cooper Village/Stuyvesant Town added to total delinquencies. These five interests, totaling 77 basis points, became delinquent in January 2010 and affect five different CDOs.
On Jan. 24, the borrower requested to return the property to the special servicer via a deed-in-lieu.
"The deed-in-lieu (of foreclosure) transfer will be a prolonged process as an agreement is negotiated and any remedies available to the holders of the $1.4 billion in mezzanine debt are determined," said senior director Karen Trebach.
"Fitch will continue to model these assets at a full loss to each CDO."
Other new delinquencies included three maturity defaults (18 basis points), seven term defaults (37 basis points) and seven credit impaired rated assets (37 bps) consisting of a mix of CMBS, CRE CDOs and bank loans.
There were also three repurchases, which included one 90-plus-days delinquent B-note and two lowly rated CREL CDO assets. All three received limited recoveries and were exchanged by the asset managers for higher-rated collateral.
In other recent commercial mortgage news, the Chicago office of Holliday Fenoglio Fowler arranged a $10.75 million refinancing for Gateway Tower, a 20-story, Class A office tower in St. Louis.
HFF director Matthew Schoenfeldt worked on behalf of the borrower, Sovereign Partners, to secure the five-year, fixed-rate loan through Ladder Capital Finance.
This financing retires a maturing CMBS loan that was originated by Bank of America in 2005.
The 213,228-square-foot Gateway Tower project is 95% leased to tenants including KMOV-TV Inc., Fox Galvin LLC, Infinity Broadcasting Corp. and East-West Gateway Council.
Among other commercial mortgage developments, Fitch Ratings has downgraded 14 and affirmed three classes issued by G-Force 2005-RR2 LLC as a result of losses to the commercial mortgage-backed securities collateral within the portfolio.
Since Fitch's last rating action in January 2009, the transaction has experienced approximately $50 million in losses. Additionally, 2.9% of the portfolio has been downgraded and 5.4% was placed on Rating Watch Negative.
Approximately 81.4% of the portfolio has a Fitch derived rating below investment grade and 25.1% has a rating in the CCC rating category or lower, compared to 78.6% and 21.4%, respectively, at last review.
This transaction was analyzed under the framework described in the report "Global Rating Criteria for Structured Finance CDOs" using the Portfolio Credit Model for projecting future default levels for the underlying portfolio.
Based on this analysis, the credit enhancement available to the class A-2 and A-3FL notes is generally consistent with the PCM rating loss rate for the AAA and BBB rating category, respectively.
Similarly, the credit enhancement available to each of classes A-4A through B is generally consistent with the PCM rating loss rate for the B rating category and class C notes with the PCM rating loss rate for the CCC rating category firm three classes issued by G-Force 2005-RR2 LLC as a result of losses to the commercial mortgage-backed securities collateral within the portfolio.
In general, commercial real estate delinquencies have followed residential real estate overdues in tanking and have now become a full-blown crisis just as residential was starting in 2007.