Fitch: New U.S. CMBS Delinquencies Haven’t Been This Low Since 2008

Fitch Ratings reports that the rate of new U.S. commercial mortgage-backed securities (CMBS) delinquencies declined 19 bps in April to 7.44%, from 7.63% in March. The dollar volume of new delinquencies, $747 million, represents the first time the figure has dropped below the $1 billion mark since February 2009.

The last time new delinquencies were lower was in October 2008, when they came in at just $458 million and the overall late-pay rate stood at 0.51%, Fitch says.

In April, resolutions of $1.5 billion outpaced new additions to the index by nearly two-to-one. However, Fitch-rated new issuance volume of $1.8 billion fell short of runoff of $2.1 billion.

The volume of CMBS loan resolutions is likely to remain strong, with the share of real estate owned (REO) assets at an all-time high, representing 45% of total outstanding delinquencies by balance. The share of REOs is even higher for large loans (greater than $100 million), at 57% by unpaid balance as of last month. With large assets having now made their way through the foreclosure process, CMBS delinquencies stand to drop further, sometimes sharply, as those assets are sold.

Current delinquency rates for the major property sectors include the following: industrial, 9.82%; office, 8.39%; multifamily, 8.38%; hotel, 8.01%; and retail, 7.10%.


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