A rise in late payments within the large multifamily sector has spawned a 36-basis-point jump in delinquencies within commercial mortgage-backed securities, according to Fitch Ratings. The agency’s latest loan delinquency index showed the sudden rise in CMBS delinquencies is attributable to not only to late-pays, but to high-profile multifamily defaults. The delinquency rate in the multifamily sector rose to 17.4% in January, up from 15.63% the prior month and at the highest level since Fitch began tracking CMBS delinquencies. Meanwhile, the overall CMBS delinquency rate in the U.S. is currently at 8.59%, according to Fitch. Fitch has 955 multifamily properties in its ratings portfolio classified as delinquent. Fifteen of the loans range in size from $54 million to $2.8 billion, making up half of the delinquent payments within the portfolio. Three multifamily loans — valued at $915 million total — represent the majority of the loans in default. “More defaults are likely for collateral with cash flow that was not stabilized at issuance and cash-strapped borrowers that over-leveraged their properties at the height of the market,” said Mary MacNeill, managing director of Fitch Inc. Fitch said the delinquency rates by property type are as follows:
- Multifamily: 17.40% (from 15.63%)
- Hotel: 14.43% (from 13.99%)
- Industrial: 8.53% (from 6.24%)
- Retail: 6.88% (from 7.20%)
- Office: 5.50% (from 5.69%)
Write to Kerri Panchuk
