Real estate-owned properties now make up one-third of all U.S. commercial–mortgage backed securities delinquencies, Fitch Ratings said Friday.

The latest index results from Fitch show U.S. CMBS delinquencies rose for two months in a row while the volume of REO assets continued to climb.

Late-pays increased 10-basis points in April to 8.53%, compared to 8.43% in March. Fitch said the upswing in late pays was expected with many five-year loans first originated in 2007 starting to come due.  New delinquencies from that year topped $1 billion in each of the last three months, Fitch said.

Multifamily delinquencies led the way with a delinquency rate of 11.64%, compared to 12.61% in March. The hotel delinquency rate fell slightly from 10.35% in March to 10.20% in April. Industrial loans declined from 10.91% to 9.34%, while office loans increased from 7.99% to 8.36%. Retail delinquencies were the lowest at 7.39% in April, compared to 7.23% a month earlier.

Fitch highlighted industrial and multifamily CMBS loans as areas of notable improvement, while CMBS loans on office space remained a major concern.

"Over $4 billion in loans from 2007 have defaulted on either their balloon or regular payments since the start of this year," said Mary MacNeill, managing direct of Fitch. "While real-estate owned assets typically experience higher loss severities, liquidating these assets will eventually help bring down the CMBS delinquency rate."

kpanchuk@housingwire.com