SAN DIEGO—The Four Seasons Aviara Resort in Carlsbad is once again serving as anchor for the San Diego market's delinquent balance, allowing for a healthy issuance in November, Trepp LLC research analyst Sean Barrie tells GlobeSt.com. According to Barrie, responding to questions on a recent report from the firm, San Diego is one of only 17 MSAs to have a delinquency rate below or equal to 5.25% and still generate at least $22 million in issuance in November. "Not much of a shift in the delinquency rate, though the issuance is a good sign since the market's total loan balance dipped month-over-month." We spoke exclusively with Barrie about the delinquency rate in San Diego and how he sees it playing out in 2016.
GlobeSt.com: How was San Diego able to have a delinquency rate below or equal to 5.25% and still generate at least $22 million in issuance in November?
Barrie: Since the Four Seasons Aviara Resort in Carlsbad is delinquent, that property's loan balance ($186.5 million) is serving as anchor for the San Diego market's delinquent balance. If that loan was to have its delinquent status removed, the delinquency rate would drop to a much healthier level. Lending banks probably recognize this fact and decide to invest in San Diego because there's just one 'bad egg' in the market's current crop of large loans.
GlobeSt.com: How do these numbers stack up to other markets?
Barrie: Out of the top 60 markets we measure, San Diego had the 30th- highest delinquency rate (5.25%) and 35th-largest November 2015 issuance total.
GlobeSt.com:Based on previous data, what do you anticipate will happen with the San Diego delinquency rate in 2016?
Barrie: With the Four Seasons Aviara Resort mired in a loan-foreclosure process, we could see this anchor effect carry into 2016. There are no signs that the rate will worsen, but improvements will be moderate until the Four Seasons loan is resolved.
GlobeSt.com:What else should our readers know about the San Diego delinquency rate?
Barrie: The ten seriously delinquent loans (which means more than 90 days delinquent) are going through a foreclosure process. If the special servicers for these loans find resolutions in 2016, the delinquency rate could undergo a serious improvement.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
