NY Delinquency Rate Performance
How is the New York metropolitan real estate investment market doing? Tom Fink discusses the tri-state area commercial mortgage-backed security delinquency rates. It shows that New York State is outperforming its cohorts in NJ and PA. He commented that a lot of the positive performance in NY is concentrated in New York City, particularly in Manhattan. He thinks that’s the market that is driving all of NY State.
“We still see problems outside of the metropolitan area, particularly as you get upstate.” Fink acknowledges what NY State is doing to try to draw businesses upstate with the development and the tax forgiveness plans. In conclusion, it appears that NY has a long way to go before the upstate real estate market is as healthy as the NY City area.
Aaron Kaiser: Hello, I'm Aaron Kaiser, Partner at EisnerAmper and Co-Chair of our firm’s Real Estate practice. It's my pleasure today to introduce Tom Fink, Senior Vice President and Managing Director of Trepp LLC. Trepp was founded in 1979 and is the leading provider of information analytics and technology to the commercial mortgage back securities, commercial real estate and banking markets. Welcome. So, Tom, how is the New York metropolitan market doing in all of those?
Tom Fink: Well, Aaron, as you can see from the chart I've put up on the screen here, this breaks down the delinquency rate, which is 30, 60, 90 and foreclosure REO for New York versus Pennsylvania and New Jersey.
As you can see, New York state as a whole is outperforming its cohorts in New Jersey and Pennsylvania and I think if you drive around the New Jersey markets, Pennsylvania market, you can see that, but I think that what you don't see in this particular chart is that the lot of the good performance in New York is concentrated in New York City, particularly in Manhattan. That's the market that I think is driving all of New York state. We still see problems, you know, outside of the metropolitan area, particularly as you get upstate, you know, you look at what New York state is doing, trying to draw businesses upstate with a development plan and the tax forgiveness. I think New York as a state has a long way to go before upstate is the healthiest city area.
Aaron Kaiser: Tom, thank you very much for your insights and thought leadership.
Tom Fink: Aaron. It was my pleasure. I always liked working with you and the folks at EisnerAmper.
Aaron Kaiser: Thank you so much. For more information, go to EisnerAmper.com
What role are government-sponsored organizations playing in the real estate market today? Tom Fink stresses that government-sponsored agencies are still very important factors in today’s real estate marketplace.
What is the change in the level of non-performing debt and which way is the trend going? Tom Fink discusses the delinquency severity breakdown, saying “we’ve seen a real decline in the overall level of delinquencies in the market.”
Would a rise in interest rates affect the coming wall of maturities? Tom Fink states that if interest rates were to go up substantially that would provide an issue for the marketplace because of the uncertainty of the volatility.
In terms of safety and risk, what trends can be seen in the different lending classes? Tom Fink thinks credit standards have loosened over the last two to three years as more money becomes available and borrowers get better terms and conditions.
After discussing New York, Tom Fink discusses markets around the world from an equity perspective and how there's an awful lot of money is still available for pursuing equity investments in real estates around the globe in terms of debt.
The New York real estate market is doing relatively well. How is New York doing compared to the country as a whole? Tom Fink illustrates by showing the nation sectioned into regions and shows the delinquency rate in each region.
When asked about the important emerging technologies in the marketplace, Tom Fink replies, “I think we still have a long way to go before technology is really a factor in the commercial real estate market space. But, I think it’s still an exciting time”.
Tom Fink discusses the estimated upcoming commercial real estate debt maturities with annual maturities by lender type. The last 3 years have shown a continued erosion of the amount that’s due in 2016 and 2017 as people pre-pay loans.
The real estate industry has made a strong rebound since 2009 – it’s healthy, back on its feet and active. Rates continue to be at a historic low and there is still a huge amount of stimulus outstanding.