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CMBS Delinquency Rate Falls for 7 Straight Months: Fitch

The delinquency rate for commercial mortgage-backed securities (CMBS) managed to slip below 8 percent before the close of 2012, while the multifamily sector led with the biggest decline for the year, ""Fitch Ratings"":http://www.fitchratings.com/web/en/dynamic/fitch-home.jsp reported Friday.


In December, the U.S. CMBS delinquency rate declined to 7.99 percent after falling 18 basis points (bps) from 8.17 percent in November, according to Fitch's index. At the start of 2012 the delinquency rate was 8.37 percent. For seven consecutive months now, the U.S. CMBS delinquency rate has been trending downward.

""CMBS delinquencies will remain somewhat volatile, though they are likely to finish closer to 7.5% by the time 2013 comes to a close,"" said Mary MacNeill, managing director at Fitch.


Out of five sectors, three ended the year with an improved delinquency rate. Multifamily, hotels, and industrial all saw delinquencies fall, but the office and retail sectors saw their rates increase over the year.

The multifamily sector experienced the most dramatic decline for the year, but also began with the highest delinquency rate. The multifamily delinquency rate plunged 430 bps from 14.42 percent at the start of 2012, ending the year at 10.12 percent.

The hotel delinquency rate also experienced a significant decline after shedding 315 bps over the year, ending 2012 at 8.87 percent.

The industrial sector went from a delinquency rate of 10.25 percent at the start of the year to 8.61 percent in December.

The office sector was the worst performing out of all sectors and is ""a cause for concern heading into 2013,"" according to Fitch. The office delinquency rate started the year at 6.84 percent, but increased 157 bps to 8.41 percent.
Fitch named hard-hit metros such as Atlanta, Detroit, and Phoenix as ""trouble spots.""

Although the retail sector experienced an increase as well, it still ended the year with the lowest delinquency rate, 7.14 percent, after increasing 25 bps. Fitch described the sector as being the ""most stable property type.""

About Author: Esther Cho


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