Delinquencies involving U.S. commercial mortgage-backed securities (CMBS) leveled off last month after three straight months of deteriorating performance, according to the latest index results from Fitch Ratings.
CMBS late pays fell 3 basis points (bps) in June to 8.62% from 8.65% in May. The drop in delinquencies comes after increases of 10-plus bps for each of the past three months.
In June, resolutions of $2.1 billion outpaced additions to the index of $1.9 billion. Further, $3.6 billion in Fitch-rated deals closed in June, helping slow the effects of runoff in the index's denominator.
Delinquency rates for the major property types reversed course in June. Notably, the office rate improved for the first time since last October, dropping to 8.58% in June from 8.64% in May. Conversely, multifamily delinquencies, which had been declining sharply for the better part of the last year and a half, rose 29 bps to 11.64% in June. Retail, which usually has the most stable CMBS delinquency rate, saw late pays rise 22 bps in June, while the industrial rate remained relatively stable at around 10%.
Meanwhile, Fitch Ratings warns that loans backed by Atlanta properties continue to be a problem spot. Three of the four largest index additions in June were Atlanta loans, with the largest of the trio – the $115 million loan for the Gwinnett Place regional mall in Duluth, Ga. – failing to pay off at its June 8 maturity.