Fitch: CMBS Performance Improves in December

Mortgage & Real Estate

There was an 18 basis point decline in commercial mortgage-backed security loan delinquency rates in December over November, as resolutions of $1.7 billion outpaced additions of $1 billion, said Fitch Ratings. The rate for December was 7.99%, down from 8.37% one year ago.

Another company which tracks CMBS, Trepp, uses a different methodology, and it said its data found the delinquency rate unchanged between December and November.

The year finished with seven straight months where the delinquency rate declined, and Fitch noted that for the second consecutive month, no loans with balances over $100 million were added into the delinquency index.

During December, $4 billion of Fitch-rated transactions closed.
But Fitch warned that late payments on office and retail loans which were placed into CMBS bear close watch this year.

Office loans were the poorest performers last year as they began 2012 at 6.84% and increased by 157 basis points to close out the year at 8.41%. From November, office loan delinquencies fell 22 basis points. Retail also ended 2012 in worse shape than it started but overall has remained the most stable property type, Fitch said.

Overall, multifamily-property-secured loans had the worst performance in December, with a delinquency rate of 10.12%. This was an increase of from 9.92% in November. But since the end of 2011, multifamily delinquencies declined a whopping 430 basis points.

During 2012 hotel property loan performance improved by 315 basis points, while industrial property loan performance improved by 164 basis points.

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