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

subsides.

     “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.”