Wednesday, June 10, 2009

Next Domino

This has been known for some time.  The CMBS market and roll-over financing for existing projects have a long way to go before recovery.  Note also the current effects of quantitative easing in light of rising mortgage rates.

June 10 (Bloomberg) -- MetLife Inc. Chief Investment
Officer Steven Kandarian said commercial mortgage defaults will
rise in the next two to three years after the economic slump
     “The worst is to come,” Kandarian said in an interview
today with Bloomberg Television in New York, where the biggest
U.S. life insurer is based. “Typically there’s a lag between
when the economy softens and when the defaults actually occur.”
     The default rate on commercial mortgages held by U.S. banks
may rise to 4.1 percent, the highest in 17 years, by year-end as
debt for refinancing remains scarce and the recession drags down
rents, research firm Real Estate Econometrics LLC. said
yesterday in a report. Kandarian, whose portfolio contains about
$36 billion in loans on commercial property, said he expects
delinquencies for MetLife will be “relatively small.”

No comments: