Fitch: Volatility Increases for U.S. Commercial Real Estate

CHICAGO--(Business Wire)--
Further signs of increased U.S. commercial real estate market stress have
manifested in higher regional market volatility across all major sector types,
according to the latest annual U.S. Property Market Metric (PMM) update report
from Fitch Ratings. With the average cash flow volatility score rising to 3.62
last year from 2.98 in 2007, volatility in U.S. commercial real estate has
reached its highest levels since Fitch launched its PMM scores in 2000.

'While the increase in cash flow volatility was expected, what is noteworthy is
the size of the increase since historic changes in PMM scores are generally
small,' said Managing Director Bob Vrchota. 'With over 50% of the PMM scores
showing greater volatility compared to just 10% in previous years, the magnitude
of change reflects challenging forecasts for all commercial real estate property
types across all U.S. markets.'

The office sector was the hardest hit property type, with the average volatility
score jumping to 3.68 last year from 2.62 in 2007, this after four years of
improvement. Primary office markets that showed greater volatility in 2008
include the U.S.'s three largest metropolitan statistical areas (MSAs); New
York, Chicago and Los Angeles.

Multifamily properties worsened for the second straight year, with average
volatility scores jumping to 3.15 in 2008 from 2.50 in 2007. San Francisco,
Phoenix and Miami were among the multifamily markets that showed more
volatility. PMM scores for retail markets also reflected more volatility with a
3.70 average score last year as opposed to 3.12 in 2007. Several MSAs in Texas
were affected, including Dallas-Ft. Worth and Houston.

'On the positive side, U.S. CMBS multiborrower transactions benefit from
property type and geographic diversity so more volatile PMM scores in and of
themselves will not result in rating actions,' said Vrchota. 'However, the rise
in volatility is another indicator of the challenges facing commercial real
estate.'

'Fitch's U.S. PMM Update: Volatility Jumps in Commercial Real Estate' is
available at www.fitchratings.com under the following headers:

Structured Finance >> CMBS >> Special Reports

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings
Christopher Pilat, 312-606-2305
Robert M. Vrchota, 312-368-3336 (Chicago)
Media Relations:
Sandro Scenga, 212-908-0278 (New York)
sandro.scenga@fitchratings.com

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