Five-Year Loans Drive U.S. CMBS Delinquencies Higher
Fitch Ratings:
Upcoming maturities from U.S. CMBS deals originated in 2005 contributed to a 29 basis-point (bp) increase in delinquencies to 6.29% at the end of February, according to the latest U.S. CMBS delinquency index results from Fitch Ratings.
Approximately 30% of the newly delinquent loans were from 2005 transactions. In fact, the four largest newly delinquent loans (ranging in size from $65 million to $112 million) are from this vintage. Three of these four loans are past their 2010 maturity dates and are, therefore, categorized as non-performing matured loans.
‘Five-year loans originated in 2005 will continue to have difficulty refinancing this year as liquidity remains limited,’ according to Managing Director Mary MacNeill. ‘In many cases, sponsors will have to either contribute additional equity in order to refinance their loans or look to the servicers for extensions and modifications.’
For the first time, office properties saw a greater than overall average increase in the index, with a 45 bp movement month over month in comparison to the overall index of 29 bps as three of the top four newly delinquent loans are office properties. Multifamily and industrial also exceeded the overall index change at 64 and 43 bps, respectively. When the Peter Cooper Village/Stuyvesant Town loan hits 60 days delinquent, the overall index will increase 60 bps, and multifamily will increase by over 400 bps.
Current delinquency rates by property type are as follows:
–Office: 3.50%
–Hotel: 16.61%
–Retail: 5.09%
–Multifamily: 8.97%
–Industrial: 4.16%
Fitch Ratings’ delinquency index includes 2,505 loans totaling $28.5 billion of its rated portfolio, which is approximately 42,000 loans comprising $452.6 billion, that are at least 60 days delinquent or in foreclosure. The Index excludes Fitch-rated loans that are 30 to 59 days delinquent, which currently total $3.2 billion.
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About Me
Michael O'Mara specializes in commercial real estate assets in the Northeast market with extensive experience in the Retail, NNN/1031Exchange sector. Mr. O’Mara has worked in the commercial real estate market for over 20 years, including 12 years in the corporate sector. He has represented leading private investors, financial institutions and lenders, developers and retailers on asset management, and NNN portfolio sales on a national level.
