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Office CMBS Delinquency Rate Spikes to Record 11.1% in June (Wolf Street)wolfstreet.com/2025/07/01/office-cmbs-delinquency-rate-spikes-to-record-11-1-in-june-worse-than-financial-crisis-meltdown-peak-after-3-month-relapse/
1603 sats \ 3 comments \ @optimism 2 Jul econ
The top three June additions to the “delinquent” balance:
  • 1 Cal Plaza, Los Angeles: $300 million, foreclosure.
  • 75 Broad Street, New York City: $176 million, 30 days delinquent.
  • Federal Center Plaza, Washington, DC: $130 million, maturity default.
The stories behind these show that this isn't a recent thing, for example the DC property:
About 71% of the space is leased by the US government: FEMA leases 64.7% of the space which serves as its headquarters; that lease expires in 2027; and USAID leases 6.5%, and that lease expires in six months. The property was appraised at $309 million when the loan was issued. In February 2023, before the DOGE chaos snowed upon government-leased buildings, the appraised value was cut to $237 million. Earlier this year, KBRE estimated that the collateral had a liquidation value of $122 million.
And then on the "removal" side off the list-of-delinquents:
  • Selig portfolio, Seattle, $220 million, cured by transfer to a “custodial receiver.”
  • 1000 Wilshire Boulevard, Los Angeles, $128 million, cured by “performing maturity balloon.”
  • 393-401 Fifth Avenue, New York City, $94.8 million, cured by extend and pretend.
...
are they selling these, or are these just losing value?
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100 sats \ 2 replies \ @Undisciplined 2 Jul
I hadn’t considered that it’s the same set of MBS on the balance sheet and they’re just losing value, but of course that makes a lot of sense.
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321 sats \ 1 reply \ @optimism OP 2 Jul
It's a bit obscure and I can't tell for sure if those MBS' held are only FNMA/FMAC/GNMA, but looking at little more detailed data from NYFed information, i see only F/GNMA in there, so that would mean it's only residential securities from HUD.
Apparently, there's been a FOMC policy since May 2024 that:
directed the Open Market Trading Desk at the Federal Reserve Bank of New York (the Desk) to lower the cap on monthly Treasury redemptions to $25 billion and keep the cap on monthly agency debt and agency mortgage-backed securities (MBS) redemptions unchanged at $35 billion.
So that explains the way that graph moves: it's simply capped at 35B a month. But that also means that these aren't MTM in any way, and the value of these MSBs are as fictional as the ones from 2008? Ugh?
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42 sats \ 0 replies \ @optimism OP 2 Jul
Okay so I found more details here and I learned 3 things:
  1. The holdings are indeed all F/GNMA
  2. The MSBs get revalued every week
Then I downloaded a CSV for MSBs with the form at the bottom of that page with 6/18 and 6/25 data... and these seem to have lost value for...
17,638,065,700.96 = 17B in a week.
Now what I don't know yet is whether this is revaluation or partial sale. That's something for later
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