NEW YORK – Fitch Ratings’ latest U.S. CMBS Loan Delinquency Index results for February show an overall decline of four basis points to 1.23%. More importantly, it is the first time in several years that delinquencies in all four major property types declined simultaneously.
‘The decline in delinquencies was most significant in the industrial sector,’ said Mary O’Rourke, Senior Director, Fitch Ratings. Noting that reported declines are frequently the result of resolutions through asset sales of real estate owned (REO) properties where losses are often experienced, O’Rourke also said that ‘It is significant that the overall pattern of declines was evidenced across the board in multifamily, office, retail and industrial loans.’
In the office and multifamily sectors, the amount of new defaults was slightly below the amount of resolved delinquents, whereas in the industrial and retail sectors, the declines were largely the result of the resolution of larger loans.
Fitch noted that the 16% decline in the dollar balance of industrial loans is largely due to the resolution of two industrial properties in North Carolina. Both resolutions involved selling properties at significant losses. A similar pattern emerged in the retail sector, where a 7% decline was attributed to the sale of several outstanding large loans that were REO properties. Hotel delinquencies, which have improved steadily over the past year, showed a modest increase of 3.6%.
Fitch uses the minimum 60-day delinquent criteria to determine inclusion in the study. The February seasoned Loan Delinquency Index, which excludes collateral with less than one year of seasoning, rose to 1.59% from 1.57% the previous month.
