Hurricane Katrina's impact on CMBS is becoming clearer as times passes and delinquencies rise. “The spike in delinquencies due to Katrina became apparent in October and continues today,” says Larry Kay, a director in Standard & Poor's Structured Finance Ratings group.

Industry experts say many borrowers have delayed their debt service obligations because they are receiving tenant rent payments late or not at all. Additionally, many borrowers may have been underinsured or may be working through the lengthy process for insurance reimbursements and are unable to pay their mortgage.

One-month delinquencies for all property types, for example, climbed to $219.4 million from pre-Katrina levels of $4.2 million, while late payments outside of their grace period jumped by 325 percent, according to S&P. (See related stories on pages 32 and 36.)

“Initially the lenders were being flexible and giving some postponement, but we're seeing more loans move into special servicing, especially if the property doesn't have the right kind of insurance,” Kay says. S&P identified nearly $3 billion of CMBS securities in Katrina's strike zone. Of that total, $550 million are retail assets, Kay says. New York-based CMBS research firm Trepp LLC found that 102 retail loans in 69 transactions were affected by Katrina.

For example, The Mills Corp.'s Esplanade Mall in Kenner, La., makes up roughly 10 percent of a Goldman Sachs CMBS pool. The property, with a total loan value of $58 million, suffered minor damage and reopened in late October. Other retail centers haven't been as lucky.

“Twenty-five percent of the retail CMBS in the path of Katrina are one-month delinquent or still in the grace period,” Kay points out, adding that preliminary reports show that there are fewer retail delinquencies than other sectors. Fifty percent of multi-family loans are one-month delinquent.