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CMBS Delinquency Rate Falls for Fourth Straight Month: Fitch

Although the improvement was slight, the drop in the delinquency rate for commercial mortgage-backed securities (CMBS) in September was still an improvement, and the decline marks the fourth straight monthly drop, ""Fitch Ratings"":http://www.fitchratings.com/web/en/dynamic/fitch-home.jsp reported Friday.

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The CMBS delinquency rate fell to 8.37 percent from August's 8.39 percent.

The ratings agency explained that in September, there were $1.5 billion in resolutions while additions totaled $1.3 billion, with a $65 million grocery-anchored shopping center in Long Island as the largest loan added.

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Fitch also noted refinancing/payoffs for several large loans that were originated at or near the market's peak. Even though some large loans were paid in full, Fitch said they were paid off after refinancing delays.

Fitch gave the example of Westin New York, which matured in March after two 90-day forbearances and was paid off September 11. Another example was a 450 Lexington Avenue loan, which matured in July but did not get paid off until September.

""Maturity defaults even on quality assets are still taking place, suggesting that borrowers may be lacking the proper motivation to secure new financing sooner, often resulting in fees to the trust,"" said Mary MacNeill, managing director for Fitch, in a release.

As for individual CMBS categories, hotel and multifamily delinquency rates continued their downward trend, and office and retail rates moved higher.

*CMBS Delinquency Rates in September*
(from prior month)

Hotel: 10.24% (from 10.82%)
Multifamily: 9.95% (from 10.18%)
Industrial: 9.03% (from 8.54%)
Office: 8.83% (from 8.72%)
Retail: 7.48% (from 7.43%)

About Author: Esther Cho

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