The reprieve in delinquency increases was short-lived, as U.S. CMBS late pays resumed their climb this past month, according to the latest delinquency index results from Fitch Ratings.
Delinquencies rose 18 basis points to finish November at 7.96%. Driving the increase was $1.6 billion of new defaults on office- and retail-backed loans.
‘Office and retail properties fared well during the recession due to generally longer-term lease agreements, but they are now most vulnerable to asset-specific performance declines for the same reason,’ says Managing Director Mary MacNeill. ‘As office leases originated at the peak of the market come up for renewal, they will be marked down to lower market rents, pressuring operating income.’
Multifamily continues to lead all property types, with a 14.75% delinquency rate at the end of November. Hotel loans hold the second-highest rate, at 14.27%. The delinquency rates for retail, industrial and office loans were 6.55%, 6.01% and 5.38%, respectively.
SOURCE: Fitch Ratings