MARKET SNAPSHOT: Real Estate Index Rises Amid Delinquencies

By Kate Gibson

The stock market has for weeks been dogged by talk of trouble lurking in commercial real estate, yet investors focused on the Dow Jones Real Estate Index must not have gotten the memo.

The real estate benchmark's up nearly 50% since early March, exceeding the performance of the broad market, despite commercial mortgage delinquencies hitting 11-year highs in April.

On Thursday, property research firm Trepp LLC reported that the level of loans 30 days or more behind in payments last month climbed to 2.45%, with the credit squeeze making it hard for landlords to refinance bank loans.

The delinquencies are up "by a factor of five from a year ago," said Nick Kalivas, equity analyst at MF Global Research. "Even though commercial real estate lags the cycle, the numbers highlight the battle banks face in producing profits."

Bill Feingold, managing director at Newport Value Partners, sounded a similar note of caution, saying he's "very concerned about commercial real estate."

In particular, Feingold's worried that the stock market has gotten ahead of itself, rallying on earnings from banks and other companies that stem from cost-cuts as opposed to growth.

On Friday, the Dow Jones U.S. Real Estate Index (IYR) rose 1.4% to 33.05, up 48.8% from its March 6 close of 22.21.

Meanwhile, the major stock indexes were mixed after the Labor Department reported job losses slowed in April. .

The Dow Jones Industrial Average (DJI) up 65.16 points at 8,475.01. The S&P 500 (SPX) added 8.18 points to 915.57, and the Nasdaq Composite (RIXF) shed 1.79 points to 1,714.45.