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Fitch Ratings says CMBS delinquencies rose to 7.96% in November

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The number of delinquencies in commercial mortgage-backed securities rose last month with increases across all property types, according to Fitch Ratings. Analysts said the delinquency rate rose to 7.96% in November from 7.78% the prior month led by $1.6 billion of new defaults on office- and retail-backed loans. "Office and retail properties fared well during the recession due to generally longer-term lease agreements, but they are now most vulnerable to asset-specific performance declines for the same reason," according to Fitch Managing Director Mary MacNeill. "As office leases originated at the peak of the market come up for renewal, they will be marked down to lower market rents, pressuring operating income." Fitch said delinquencies within multifamily properties rose to 14.75% in November from 14.57% a month earlier, while defaults on loans for hotels climbed to 14.27% from 14.14%. Office properties continue to have the lowest rate of loans that are in default at 5.63%, which is up from 5.38% in October. Retail delinquencies rose to 6.55% last month from 6.25% and the rate of industrial properties with mortgages in default was 6.01%, up from 5.83%. In August, Fitch said it expects to continue downgrades on CMBS through next year, if not into 2012, because of heightened default levels. Meanwhile, Moody's Investors Service has lowered its ratings on tens of billions of dollars worth of CMBS over the past few months because of higher expected losses for the mortgage pools due to increased delinquencies from troubled loans. In late October, Realpoint said the current delinquent unpaid balance within CMBS is more than double a year ago and 28 times higher than the first quarter of 2007. Earlier this month, analytics research firm Trepp said the delinquency rate on loans in CMBS climbed to 8.93% in November. Write to Jason Philyaw.

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