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General Growth feeds commercial mortgage woes


Delinquencies on mortgages that underlie commercial mortgage-backed securities rose by $1.63 billion in May, pushed up in part by the bankruptcy of General Growth Properties Inc., according to rating agency Realpoint LLC, Reuters reported.

The amount of delinquencies, up for the ninth straight month, rose to a 12-month trailing high of $18.78 billion out of a total unpaid balance of $835.4 billion of commercial mortgage pools Realpoint had under review at the end of May, the rating agency said on Thursday.

The rising tide of delinquent loans reflects the weakening of U.S. commercial real estate and the inability of borrowers to refinance maturing loans, Reuters said.

The delinquency amount compares with $4.01 billion a year earlier.

Problem loans that require special servicing increased in May by an unprecedented $12.53 billion to a trailing 12-month high of $37.05 billion, Realpoint said.

Most of the increase, about $7.33 billion, was due to the transfer of loans on malls owned by General Growth, which filed for Chapter 11 bankruptcy protection in late April. Retail real estate accounted for 42.8 percent of the assets in special servicing because of General Growth. Retail real estate surpassed multifamily, which made up 23.4 percent of the specially serviced pool.

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