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Fitch: CMBS Delinquencies Fall Again; Georgia Remains ‘Problem Spot’

The national delinquency rate for commercial mortgage-backed securities (CMBS) began the year with another decline, marking the eighth consecutive month of decreases, according to ""Fitch Ratings"":http://www.fitchratings.com/web/en/dynamic/fitch-home.jsp. The rating agency, however, noted regional struggles in Georgia.


""Offsetting the positive movement in overall delinquencies is Georgia, which continues to be a problem spot,"" Fitch said.

In January, the CMBS delinquency rate fell 8 basis points (bps), ending the month at 7.91 percent. January's CMBS delinquency rate is now at the lowest level since October 2010, when the rate stood at 7.78 percent.

Fitch explained resolutions in January outpaced additions to the index, with resolutions totaling $1.4 billion compared to $1.1 billion in additions.


Though, January also saw $600 million in new issuance volume compared to $2.9 billion in portfolio runoff.

In addition, the agency highlighted issues in Georgia, where the delinquency rate is 20 percent. The two largest loans added to the index in January--$71.1 million Millennium in Midtown and $67.7 million Southlake Mall--were based in Atlanta.

Analysis from Fitch found office loans in Atlanta suffer from high loss severities as well.

""Loss severities on REO sales of Atlanta offices neared 80% over the last year, a stark contrast compared to most other cities,"" said Scott Pritchard, director at Fitch Ratings.

For example, Fitch examined Atlanta office loans exceeding $10 million that were in REO status at the beginning of 2012. Among the loans, four totaling $88 million were disposed of and had an average loss severity of 78 percent based on the original balance.

Among the different sectors, Fitch found the multifamily delinquency rate plunged 39 bps to 9.73 percent from 10.12 percent in December.

The hotel delinquency rate fell 11 bps to 8.76 percent from the month before. The office sector also saw a decline and decreased to 8.33 percent from 8.41 percent.

On the other hand, the retail sector spiked to 7.43 percent from 7.14 percent in December. For the industrial sector, the rate increased month-over-month to 8.69 percent from 8.61 percent.

About Author: Esther Cho


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