Following an increase in April, delinquencies on U.S. commercial real estate loan collateralized debt obligations (CREL CDOs) fell 70 basis points (bps) last month to 14.1%, Fitch Ratings reports. The decrease completely reverses a 70-bp rise in delinquencies in April.
New delinquencies were offset by the resolution of 18 formerly delinquent assets, Fitch says. Additionally, CREL CDO asset managers reported approximately $73 million in realized losses from the disposal of defaulted and credit-impaired assets in May.
"Realized losses for CREL CDOs are in line with the average monthly amount over the past year," says Director Stacey McGovern.
The highest single loss occurred when an asset manager affiliate repurchased a credit-risk asset at a substantial discount to par. The mezzanine loan was backed by interests in a large New York multifamily portfolio, Fitch explains.
