Commercial Briefs

MBA (8/12/2008 ) Murray, Michael
Forbearance, Extensions Lower Fitch’s CREL CDO Index
Forbearance and extensions kept U.S. commercial real estate loan collateralized debt obligation delinquencies "relatively low" in July as asset managers continued repurchasing troubled assets out of pools, said Fitch Ratings, New York, in its July 2008 CREL CDO delinquency index.

Forbearance of a maturity defaulted loan led to the delinquency rate decline to 1.46 percent from 1.58 percent in the previous month for 19 loans in the index. The index includes loans delinquent 60 days or longer, matured balloon loans and repurchased assets during the current period. Multifamily, condo conversion and residential land properties represent nearly one-third of the index balance, and multifamily secures more than 80 percent of 30-day delinquent loans.

A former matured balloon loan—now operating under a forbearance agreement to pay only interest at the current time—accounted for a 34 basis-point decline of the index. Another whole loan, granted a nine-month extension by the asset manager, accounted for a four basis point decline. Three new loans—multifamily or condo conversion loans—offset the decline by 24 basis points.

Loan extensions increased to 25 in July from 20 the previous month, and Fitch said it has concerns that the trend of extensions delays potential losses on the loan.

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Freddie Mac Approves PNC MultiFamily for Affordable Housing
PNC MultiFamily Capital, Pittsburgh, Pa., became the third lender approved by Freddie Mac to enter into the agency’s Delegated Underwriting for Targeted Affordable Housing model.

PNC moved from the initial stage of a delegated underwriting with Freddie Mac to a “fully delegated state,” which will help provide more efficient delivery of capital to PNC’s affordable housing customers, said Tom Booher, executive vice president at PNC MultiFamily Capital.

Delegated underwriting provides Freddie Mac’s qualified correspondent lenders expedited processing and flexibility in exchange for a share of the risk when underwriting mortgages secured by properties benefiting from low- income housing tax credits.

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Finance Costs Challenge Life Sciences Sector
Colleges and universities drive much of the life sciences industry in Washington, D.C./Baltimore/suburban Md. and Cambridge/Boston, based on a report from Los Angeles-based CB Richard Ellis.

Commercial real estate’s life sciences sector face challenges of rising construction costs for specialized improvements to existing office space, global competition to expand in high-end locations and patent concerns for the next five years,

The report, Primer on Life Sciences Properties, presented its findings from Cambridge/Boston, Los Angeles, Metro New York/northern New Jersey, Philadelphia/southern New Jersey, Raleigh-Durham, San Diego, San Francisco Bay area, Seattle/Bellevue/Washington and Washington, D.C./Baltimore/suburban Maryland.

Johns Hopkins University and the University of Maryland provided most of the infrastructure for tenant lab space in the Baltimore area, while the Washington suburbs—particularly in Montgomery County’s Interstate 270 Corridor—fuel inventory from existing lab infrastructure and several federal government agencies.

Harvard University and Massachusetts Institute of Technology drove the Cambridge/Boston market. At year-end 2007, Cambridge had 8.5 million square feet of laboratory space, with 1 million square feet available. Asking rates for existing lab space in the Cambridge submarket ranged between $45 per square foot and $55 per square foot. Gross leasing activity totaled 1.2 million square feet in 2007.