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TEXT-Fitch:U.S. commercial properties slowly emerging from recession
September 23, 2011 / 1:05 PM / 6 years ago

TEXT-Fitch:U.S. commercial properties slowly emerging from recession

(The following statement was released by the rating agency)

Sept 23- U.S. commercial properties have seen some minor improvements of late, but the sector still has quite a ways to go before it can completely shake off the effects of the economic recession, according to Fitch Ratings.

Commercial property net operating income (NOI) is still down by 1% from year-end (YE) 2009 to YE 2010. However, NOI has shown an improvement from the prior year-of-year decline of 5%. Nonetheless, one year of positive NOI trend does not mean a recovery, according to Senior Director Adam Fox. ‘While the upswing is encouraging, net operating income is still outweighed by prior declines,’ said Fox.

That being the case, commercial property performance will slowly stabilize and report slight improvements for 2011.

Drilling down into specific property types, hotels have seen the largest performance declines over the last two years, with NOI dropping 29% between 2008 and 2010. ‘The daily reset of overnight rates make hotel properties the most vulnerable to performance declines,’ said Fox. Conversely, multifamily properties performed better declining only 1%, over the same two year period.

Below are results of Fitch’s analysis of year-over-year NOI changes by property type for YE 2008 to YE 2009, YE 2009 to YE 2010, and YE 2008 to YE 2010:

Hotel:

-29% for 2008-2009;

+7% for 2009-2010;

-25% for 2008-2010.

Retail:

-2% for 2008-2009;

-1% for 2009-2010;

-3% for 2008-2010.

Office:

-2% for 2008-2009;

-1% for 2009-2010;

-4% for 2008-2010.

Multifamily:

-2% for 2008-2009;

+0% for 2009-2010;

-1% for 2008-2010.

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:

'here 5736&rtype=mm&uid=Fitch'

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