Moody’s: U.S. CMBS Loan Delinquencies Slip to 9.16%

The delinquency rate on loans included in U.S. commercial mortgage-backed securities (CMBS) conduit/fusion transactions inched down 2 basis points in March to 9.16 percent, ""Moody's Investors Service"":http://www.moodys.com reported Thursday.
[IMAGE] More significantly, the New York-based ratings agency says the total dollar balance of delinquent loans declined in March, slipping to $56.5 billion from $56.8 billion the month before.

It's the first monthly decline in the balance recorded by the agency since October 2007.

During March loans totaling $2.7 billion became newly delinquent, while previously delinquent loans totaling approximately $3.0 billion became current, worked out, or were disposed.

In all, Moody's reports that the total number of delinquent loans decreased to 4,097 in March from 4,112 in February.

The decline in the delinquency rate was largely due to the addition of new loans, Moody's explained. All current, the new loans add to the loan total, lowering the percentage that are delinquent through what is called the ""denominator effect.""

Moody's expects the addition of new loans to continue to suppress the delinquency rate going forward.

Excluding more recently issued CMBS, specifically CMBS issued since 2009, the delinquency rate increased by four points in March to 9.39 percent, Moody's said.

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Moody's tracks all loans in U.S. conduit and fusion deals issued in 1998 or later with a current balance greater than zero.

New to this report, Moody's began reporting on the delinquency rates for the top 25 metropolitan statistical areas (MSAs).

""The range in performance by MSA varies greatly,"" said Moody's analyst Tad Philipp, ""with local delinquency rates ranging from less than half to more than three times the national average.""

The five best performing major metro areas are San Jose (2.9% delinquency rate), Boston (3.0%), Baltimore (3.3%), Washington D.C. (3.7%), and Denver (3.9%).

The five worst performing major metro areas and the respective delinquency rates are Las Vegas (32.1%), Riverside (19.0%), Tampa (17.6%), Phoenix (16.4%), and Orlando (16.1%).

New York, the MSA with the largest outstanding CMBS loan balance at 13 percent had a delinquency rate of 8.85 percent, slightly below the national average. However one loan, Peter Cooper Village and Stuyvesant Town, accounted for 42 percent of New York's overall delinquent balance.

By property type, the industrial delinquency rate fell 34 basis points in March to 9.92 percent, after large increases in January and February. Hotel loans also saw their rate decrease in March, 12 basis points to 16.29 percent.

The delinquency rate for retail loans increased 2 basis points last month to 7.27 percent. The rate for office properties increased 12 basis points to 6.89 percent.

""Industrial, multi-family, and hotel saw more resolutions than new delinquencies,"" said Philipp, ""while office and retail saw more delinquencies than resolutions.""

None of the four national regions had a change in its delinquency rate greater than six basis points. All saw small declines except the West, where the delinquency rate increased to 9.54 percent.