Delinquencies within collateralized debt obligations in commercial real estate loans rose to 14.6% in February, up slightly from the 14% level reached a month earlier, Fitch Solutions
The increase signals a trend of higher delinquencies in the segment. Signs of pressure surfaced as early as January when the delinquency rate on CDOs within commercial real estate loans hovered well above 13%
Late pays within the CREL class of CDOs are quickly approaching 15%, with the most late pays associated with construction and land loans, according to the New York-based ratings agency.
Land and construction loans represent a smaller percentage of CDOs than other property types, Fitch said. Yet, those loan types are experiencing the highest level of delinquency.
Construction loan delinquencies tied to collateralized debt obligations hovered at 53% in Fitch's latest report, while the land delinquency rate is 39%. The condo and multifamily segments have delinquency rates of 26% and 22%, respectively.
'Though office loans make up the largest percentage of CREL CDO collateral, they have the lowest delinquency rate among all property types," said Director Stacey McGovern. "Over time, however, Fitch projects office delinquencies in CREL CDOs to increase."
The delinquency rate on office loans is holding at 9%, according to Fitch, while retail and hotel commercial properties possess delinquency rates of 11% and 12%, respectively.
Write to Kerri Panchuk