TEXT-Fitch:Office loans drive slight increase in cumulative U.S. CMBS defaults

Fri Oct 26, 2012 9:02am EDT

Oct 26 - Fitch's U.S. CMBS cumulative default rate for fixed-rate CMBS increased slightly to 13.5% at third-quarter 2012 (3Q'12) from 13.2% at 2Q'12.

Newly defaulted loans for 3Q'12 totaled $2.2 billion (119 loans). This is comparable to 2Q'12, when 119 loans totaling $2.1 billion defaulted. Also helping to stabilize CMBS default rates is the pace of new issuance, which increased almost three-fold compared to the start of this year ($6.2 billion last quarter, compared to $2.1 in 1Q'12).

Office clearly leads new defaults for 2012 at over 50%, with 43 loans totaling $1.4 billion becoming delinquent for the first time this quarter. However, the office cumulative default rate still trails the other main property types.

Three newly defaulted loans were greater than $100 million:

--One Skyline Tower, $678 million office, VA; BACM 2007-1, JPM 2007-LDP10, GE 2007-C1;

--Colony IV Portfolio B, $171 million office/industrial in six states; JPM 2006-LDP9;

--Koger Center, $116 million office, FL; CSMC 2007-C1.

Additional information including a breakdown of 1Q'12 and cumulative defaults by property type and vintage is available in Fitch's weekly e-newsletter, 'U.S. CMBS Market Trends', which also contains recent rating actions and an overview of newly released CMBS research, including Fitch presales and Focus reports. The link below enables market participants to sign up to receive future issues of the E-newsletter:

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