U.S. commercial mortgage-backed securities (CMBS) delinquencies rose for the second straight month in April, according to the latest index results from Fitch Ratings.
Late pays rose 10 basis points (bps) in April to 8.53% from 8.43% in March following seven straight months of declines. Fitch Ratings says this was largely expected,as five-year loans originated in 2007 are coming due.
Thus far this year, over $4 billion of 2007 loans in Fitch-rated deals were added to the index. Further, for the past three months, new 2007 delinquencies topped $1 billion each month.
One bright spot, according to the ratings agency, was that large volumes of 2007 loans previously reported as ‘nonperforming matured’ fell out of the index in each of the last two months. These loans totaled $150 million in March and $376 million in April.
However, Fitch Ratings adds that the lion's share of these loans simply returned to a ‘performing matured’ status as opposed to actually paying off or otherwise being resolved.
Separately, Fitch Ratings reports that the $11 billion volume of real estate owned (REO) assets backed by U.S. CMBS represents one-third of all delinquencies outstanding for this loan class. Among the major property types, according to Fitch Ratings, retail REO values have fared the worst, with average declines of 65% from issuance, while multifamily came out on top with value drops of 46%. Office, industrial and lodging REO assets saw value drops of 57%, 55% and 50%, respectively.
