Fitch Sees US CMBS Delinquencies Approaching 5%
The delinquency rate of US commercial mortgage-backed securities (CMBS) reached 3.04% at the end of July as the extent of the credit crisis unwinds in the commercial real estate space. At its current rate, the US CMBS market will likely rise above 5% delinquent by year-end, according to an analysis by Fitch Ratings of commercial MBS across the retail, muti-family, office, hotel and industrial sectors. "For the past several months, delinquencies have increased at a rate of over $2bn per month; the 30-to-60 day rollover rate has consistently exceeded 50%, and resolutions from the index have been slow due to the lack of refinancings and dispositions," said Mary MacNeill, managing director of Fitch’s US CMBS Group. "If current trends continue," MacNeill added, "delinquencies are likely to pass 5% by the end of 2009, though the likelihood of large recent vintage proforma loans depleting their debt service reserves by year-end could drive the percentage of delinquent loans past 6% by first-quarter 2010." Retail loans made p $4.8bn of delinquent loans as of July 31, while multi-family and office loans rose to $3.5bn and $2.3bn, respectively. Hotel loans accounted for $2.2bn in delinquencies, while industrial loans made up $510m of delinquencies. The multi-family segment alone bore a 5.03% delinquency rate, while hotels followed with 4.3%. Office properties seemed to far the best as of July, with only 1.54% delinquent. Write to Diana Golobay.