May 13 (The following statement was released by the rating agency)
U.S. CMBS delinquencies fell sharply last month as new additions to the late-pay ranks fell to a post-recession low, according to the latest index results from Fitch Ratings.
CMBS late-pays declined 19 basis points (bps) in April to 7.44% from 7.63% a month earlier. This comes as new delinquencies of $747 million dipped below the $1 billion mark for the first time since February 2009 ($980 million). The last time new delinquencies were lower was in October 2008, when they came in at just $458 million and the overall late-pay rate stood at a mere 0.51%.
In April, resolutions of $1.5 billion outpaced new additions to the index by nearly two-to-one. However, Fitch-rated new issuance volume of $1.8 billion fell short of runoff of $2.1 billion.
The volume of CMBS loan resolutions is likely to remain strong with the share of real estate owned (REO) assets at an all-time high, representing 45% of total outstanding delinquencies by balance. The share of REOs is even higher for large loans (greater than $100 million), at 57% by unpaid balance as of last month. With large assets having now made their way through the foreclosure process, CMBS delinquencies stand to drop further, sometimes sharply, as those assets are sold.
Current and previous delinquency rates are as follows:
--Industrial: 9.82% (from 9.41% in March)
--Office: 8.39% (from 8.50%)
--Multifamily: 8.38% (from 8.91%)
--Hotel: 8.01% (from 7.71%)
--Retail: 7.10% (from 7.09%)
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: