Five-Year Loans Drive CMBS Delinquencies Higher

Upcoming maturities from U.S. commercial mortgage-backed securities (CMBS) deals that originated in 2005 contributed to a 29 basis point (bp) increase in delinquencies to 6.29% at the end of February, according to the latest U.S. CMBS delinquency index results from Fitch Ratings.

Approximately 30% of the newly delinquent loans, including the four largest, were from 2005 transactions. Three of these four loans, which range in size from $65 million to $112 million, are past their 2010 maturity dates and are, therefore, categorized as nonperforming matured loans.

"Five-year loans originated in 2005 will continue to have difficulty refinancing this year as liquidity remains limited," according to Mary MacNeill, a managing director at Fitch. "In many cases, sponsors will have to either contribute additional equity in order to refinance their loans or look to the servicers for extensions and modifications."

For the first time, office properties saw a greater than overall average increase in the index, with a 45 bp movement month-over-month in comparison to the overall index of 29 bps, as three of the top four newly delinquent loans are office properties. Multifamily and industrial also exceeded the overall index change at 64 bps and 43 bps, respectively.

When the Peter Cooper Village/Stuyvesant Town loan hits 60 days delinquent, the overall index will increase by 60 bps, and multifamily will increase by over 400 bps.

Current delinquency rates by property type are as follows:

  • office – 3.50%;
  • hotel – 16.61%;
  • retail – 5.09%;
  • multifamily – 8.97%; and
  • industrial – 4.16%.

Fitch's delinquency index includes 2,505 loans totaling $28.5 billion of the Fitch-rated universe of approximately 42,000 loans comprising $452.6 billion that are at least 60 days delinquent or in foreclosure. The index excludes Fitch-rated loans that are 30 to 59 days delinquent, which currently total $3.2 billion.

SOURCE: Fitch Ratings


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