U.S. commercial real estate loan collateralized debt obligation (CREL CDO) delinquencies rose to 14% in January from 13.6% in December, according to the latest index results from Fitch Ratings. The increase is the net result of 10 new delinquent assets and 13 removed or now-current assets.
The rise in delinquencies is not expected to impact the agency's CREL CDO ratings, as Fitch says its analysis already takes into account potential future spikes. However, ratings on the most junior classes remain subject to volatility, as future realized losses may differ from current expectations, Fitch adds.
January's largest new delinquency is a restructured land loan, which has interests contributed to two different CDOs. Lot sales at the property have not been at the pace anticipated when the loan was modified last year, and the borrower has not been able to cover the debt service payments.
‘Non-cash flowing property types continue to have the highest delinquency rates of all property types,’ says Director Stacey McGovern. ‘Approximately one-half of all construction loans and one-third of all land loans contributed to CREL CDOs are currently delinquent.’
In January, 33 of 34 Fitch-rated CREL CDOs reported delinquencies ranging from 1.3% to 46.8%.
SOURCE: Fitch Ratings
