Fitch: Some Volatility Lies Ahead for U.S. CMBS Delinquencies

NEW YORK--(BUSINESS WIRE)-- U.S. CMBS delinquencies rose for the first time in ten months with further fluctuations on the horizon, according to the latest index results from Fitch Ratings.

Loan delinquencies rose two basis points (bps) in April to 2.92% from 2.90% a month earlier, marking the first increase in the index since June of last year. New delinquencies of $494 million exceeded resolutions of $353 million. Fitch-rated new issuance volume of $6.8 billion in March (from seven transactions) exceeded the portfolio runoff of $5.8 billion, causing an increase in the index denominator.

Fitch expects the CMBS delinquency rate to fluctuate during the year but still remain below 3% by year end as recent larger balance loan transfers to special servicing may become delinquent. Additionally, servicers continue to resolve existing specially serviced assets as new issuance adds to the index denominator.

Fitch has recently observed larger balance loans transfer to special servicing with increasing frequency. In fact nine loans ($1.98 billion) with loan balances greater than $100 million have transferred to special servicing since the beginning of the year. The largest new delinquency was the $259 million Fair Lakes Office Park loan in Fair Lakes, VA. In contrast, resolution activity last month was mainly from smaller loans (average loan balance of $7 million). The largest four resolutions, three of which were retail properties, were between $26 million and $28 million, while the remaining were all less than $16 million.

Current and previous delinquency rates by property type are as follows:

--Retail: 4.42% (from 4.45% in March);

--Office: 4.16% (from 4.08%);

--Hotel: 3.59% (from 3.20%);

--Multifamily: 0.90% (from 0.92%);

--Industrial: 3.34% (from 3.49%);

--Mixed Use: 3.25% (from 3.25%);

--Other: 0.72% (from 0.78%).

Additional information is available in Fitch's weekly e-newsletter, 'U.S. CMBS Market Trends', which also contains recent rating actions and an overview of newly released CMBS research, including Fitch presales and Focus reports. The link below enables market participants to sign up to receive future issues of the E-newsletter: 'http://pages.fitchemail.fitchratings.com/CMBSMktOptin/'

Additional information is available at www.fitchratings.com.

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View source version on businesswire.com: http://www.businesswire.com/news/home/20160516005981/en/

Fitch Ratings
Mary MacNeill
Managing Director
+1-212-908-0785
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004
or
Melissa Che
Director
+1-212-612-7862
or
Media Relations:
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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