Monday, January 11, 2010

This morning I saw some CMBS news on Calculated Risk and CRE Review and followed the links to various articles.  CMBS defaults are expected to peak at 12%, which is much higher than the record defaults of the late 1980s, which peaked around 6% (although the CMBS market is much larger today than in the '80s).  The current default rates are at 4.71%, so a jump to 12% is big.  Currently, hotels and multifamily are leading the default parade at 9.13% and 7.54%, respectively.  Here is a counter intuitive post from a Reuter's blog stating that CMBS investors are set to benefit in 2010 as investors believe that their worries were overstated at year ago.   I hope the poster is correct.   Either way, the loans done between 2004 and 2008, and really I am thinking the loans done from mid-2005 through the end of 2007, are going to cause the most trouble.  This is stating the obvious, especially since real estate prices are down 44% from their peak, according to the Reuter's blog linked to above.


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