April 12 (The following statement was released by the rating agency)
The ongoing struggles of office loans led to a slight
increase in U.S. CMBS delinquencies and the first one since May of last year,
according to the latest index results from Fitch Ratings.
After falling to a three-year low, CMBS late-pays rose two basis points (bps) in
March to 7.63% from 7.61% a month earlier. This is the first time in 10 months
that overall delinquencies have risen. CMBS loan resolutions edged out new
additions to the index, but a drop in new issuance volume failed to keep pace
with the runoff, thus causing the delinquency rate to rise. That said, the
increase may be short-lived.
Loans backed by office properties continue to worsen. Office delinquencies
increased by 32 bps month-over-month to 8.50%. In fact, the six largest
additions to the index in March were all office loans. This group was led by the
$111 million Oasis Net Leased Portfolio loan (BSCMSI 2005-PWR10). Fitch had
previously excluded the loan from its delinquency ranks as the reported
delinquent status was merely attributable to posting delays. However, a
deed-in-lieu of foreclosure now appears imminent, prompting Fitch to include the
loan in the index.
While office loans continue their struggles, delinquency rates for all other
major property types improved in March.
Current and previous delinquency rates are as follows:
--Industrial: 9.41% (from 9.61% in February)
--Multifamily: 8.91% (from 9.14%)
--Office: 8.50% (from 8.18%)
--Hotel: 7.71% (from 8.32%)
--Retail: 7.09% (from 7.35%)
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
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