November marked the fourth straight month that Fitch Ratings has recorded a decline in the delinquency rate for loans held in U.S. commercial-backed mortgage securities (CMBS).CMBS late-pays fell by 15 basis points last month to 8.41 percent, down from 8.56 percent in October. New delinquencies totaling $1.8 billion were offset by $2.2 billion of resolutions, Fitch reports.
Behind the positive numbers, though, the New York-based ratings agency says the performance of CMBS collateralized by office properties remain an area of concern heading into 2012. More than half of all new delinquencies in November consisted of office loans.
Of the four most prevalent CMBS property types (office, retail, multifamily, and hotel), loans backed by office properties saw the largest percentage gain in delinquencies since October, as well as over the past twelve months.
Office late-pays were up 4.3 percent (27 bps) month-over-month, and since November 2010 they have increased 16.5 percent (93 bps), settling in at a 6.56 percent delinquency rate as of the end of November.
Office properties now contribute 210 bps ($8.4 billion) to Fitch’s CMBS delinquency index. The agency has said for some time now that office properties with rolling rents would be responsible for an increasing number of new delinquencies.
Fitch says delinquencies for loans backed by office properties have closely mirrored broader trends seen across the sector. For example, several weak office markets contribute an outsized share toward the overall office delinquency figure, including Atlanta, Phoenix, Dallas, Sacramento, Detroit, and Las Vegas.
Each of these markets experienced third-quarter vacancy rates at or in excess of 20 percent, with three markets – Phoenix, Detroit, and Las Vegas – reporting rates over 25 percent, according to data provided by REIS.
However, loans backed by central business district (CBD) office properties from the strongest office markets are virtually absent from Fitch’s index. For instance, the CBDs of D.C., New York City, San Francisco, and Boston collectively contribute just one office loan to the index – a New York City office property in foreclosure.
In contrast to the increase for office – and modest upticks for hotel and industrial – multifamily and retail delinquency rates declined last month.
Multifamily delinquencies dropped 28 basis points to 15.71 percent, while retail shed 20 basis points to hit 6.63 percent.
Past-dues among hotel properties rose 12 basis points, posting a delinquency rate of 12.66 percent in November, while industrial delinquencies edged up 4 basis points to 10.34 percent.
Fitch Ratings’ delinquency index includes 2,579 loans totaling $33.8 billion that are currently at least 60 days delinquent, in foreclosure, REO, or considered non-performing matured. The total delinquency percentage is calculated from the outstanding CMBS populated rated by Fitch, consisting of approximately 33,500 loans comprising $402.3 billion.
The index excludes rated loans that are 30 to 59 days delinquent, which totaled $2.1 billion in November, compared with $1.5 billion in October.
Fitch Ratings maintains a ‘stable outlook’ on approximately 86 percent of its U.S. CMBS portfolio. Most of the remaining bonds are either considered distressed (8 percent) or have a ‘negative outlook (6 percent). (Carrie Bay -dsnews.com)
Each of these markets experienced third-quarter vacancy rates at or in excess of 20 percent, with three markets – Phoenix, Detroit, and Las Vegas – reporting rates over 25 percent, according to data provided by REIS.
However, loans backed by central business district (CBD) office properties from the strongest office markets are virtually absent from Fitch’s index. For instance, the CBDs of D.C., New York City, San Francisco, and Boston collectively contribute just one office loan to the index – a New York City office property in foreclosure.
In contrast to the increase for office – and modest upticks for hotel and industrial – multifamily and retail delinquency rates declined last month.
Multifamily delinquencies dropped 28 basis points to 15.71 percent, while retail shed 20 basis points to hit 6.63 percent.
Past-dues among hotel properties rose 12 basis points, posting a delinquency rate of 12.66 percent in November, while industrial delinquencies edged up 4 basis points to 10.34 percent.
Fitch Ratings’ delinquency index includes 2,579 loans totaling $33.8 billion that are currently at least 60 days delinquent, in foreclosure, REO, or considered non-performing matured. The total delinquency percentage is calculated from the outstanding CMBS populated rated by Fitch, consisting of approximately 33,500 loans comprising $402.3 billion.
The index excludes rated loans that are 30 to 59 days delinquent, which totaled $2.1 billion in November, compared with $1.5 billion in October.
Fitch Ratings maintains a ‘stable outlook’ on approximately 86 percent of its U.S. CMBS portfolio. Most of the remaining bonds are either considered distressed (8 percent) or have a ‘negative outlook (6 percent). (Carrie Bay -dsnews.com)
