TEXT-Fitch U.S. CMBS delinquencies begin 2013 lower; Georgia late-pays hit 20%
Feb 08 - U.S. CMBS delinquencies started 2013 on a positive note while struggles continue for one of the more hard-hit regions, according to the latest index results from Fitch Ratings.
CMBS late-pays declined eight basis points (bps) in January to 7.91% from 7.99% a month earlier. This marks the eighth straight month of declines and the lowest level since October 2010 (when it stood at 7.78%). In January, resolutions of $1.4 billion outpaced additions to the index of $1.1 billion. However, Fitch-rated new issuance volume of $600 million fell short of $2.9 billion in portfolio runoff last month.
Offsetting the positive movement in overall delinquencies is Georgia, which continues to be a problem spot. The two largest loans entering the index last month?the $71.1 million Millennium in Midtown (GSMS 2006-GG6) and $67.7 million Southlake Mall (BSCMS 2007-PWR18) are both located in Atlanta. This helped push the delinquency rate for Georgia to 20%. This represents the second-highest rate of any state with at least $5 billion in CMBS outstanding (behind Nevada at 20.7%).
And it appears the worst is not over for this region.
Fitch took a closer look at Atlanta office loans greater than $10 million that were REO as of the start of last year. Of those, four loans totaling $88 million were disposed of. It took an average of 18.2 months for those properties to be sold from the time they were foreclosed upon (with an average loss severity of 78% of the original balance).
Additionally, loss severities for another six Atlanta office properties that were REO at the start of last year and remain outstanding would be 52% based on recent appraisals. However, Fitch expects actual severities to be higher.
Current and previous delinquency rates are as follows:
--Multifamily: 9.73% (from 10.12% in December)
--Hotel: 8.76% (from 8.87%)
--Industrial: 8.69% (from 8.61%)
--Office: 8.33% (from 8.41%)
--Retail: 7.43% (from 7.14%)
Additional information 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: