After falling to a three-year low, late-pays on U.S. commercial mortgage-backed securities (CMBS) rose 2 basis points (bps) in March to 7.63% from 7.61% a month earlier, according to new data from Fitch Ratings. This is the first time in 10 months that overall delinquencies have risen – the last increase took place in May 2012, when delinquencies stood at 8.65%.
Fitch Ratings reports that resolutions of $1.3 billion in March edged out new additions to the index of $1.1 billion. However, Fitch-rated new issuance volume ($3.6 billion) failed to keep pace with the runoff of $7.8 billion, thus causing a decrease in the index denominator. However, the rating agency adds that preliminary 30-day numbers suggest the increase in delinquencies may be short lived.
Loans backed by office properties continue to worsen. Office delinquencies increased by 32 bps month-over-month to 8.50%; the six largest additions to the index in March were all office loans. While office loans continue their struggles, delinquency rates for all other major property types improved in March – most notably, the hotel rate fell 61 bps and retail fell 26 bps.
Fitch Ratings' delinquency index includes 1,995 loans totaling $29.7 billion that are currently at least 60 days delinquent, in foreclosure or real estate owned, or considered non-performing matured out of the outstanding rated universe of approximately 31,000 loans comprising $388.7 billion. The index excludes loans that are 30 to 59 days delinquent, which totaled $1.1 billion in March (down from $1.6 billion in February).
