The delinquency rate for U.S. commercial mortgage-backed security (CMBS) loans fell in August to 8.65% – a 36 basis points decline from July, Fitch Ratings reports.
However, the rating agency cautions that month-to-month volatility will not subside anytime soon. To illustrate this point, Fitch notes that the four largest loan resolutions in its index were classified as newly delinquent just one month prior.
"Though delinquencies have held below 10 percent and special-servicing volume has come down from 2010 peaks, tracking formerly delinquent or specially serviced loans will remain a challenge for investors," says Managing Director Mary MacNeill.
While liquidated loans have an immediate and measurable impact on their respective trusts, loans that employ a longer-term workout can be more difficult to monitor. None of August's four largest loan resolutions was liquidated.
Further complicating surveillance is a frequent lack of financials for troubled loans and volatile or inconsistent loan status reporting, Fitch notes. Earlier this week, Trepp LLC reported that CMBS delinquencies dropped in August after reaching a new high in July. Trepp blamed July's delinquency spike on the way in which some special servicers had been reporting data.
According to Fitch, new delinquencies in August totaled $1.7 billion and included three loans with a balance in excess of $100 million.
