Fitch: Large Hotel & Retail Defaults Drive U.S. CMBS Delinquencies 48bps Higher

NEW YORK--(Business Wire)--
Defaults on five loans of $100 million or more contributed to a record $2.2
billion net increase in U.S. CMBS delinquencies in June, pushing late-pays up 48
basis points (bps) to 2.55%, according to the latest U.S. CMBS delinquency index
results from Fitch Ratings.

The largest defaults included three loans collateralized by hotel properties
that defaulted during their term and two non-performing matured loans backed by
regional malls.

'Hotel performance has continued its expected sizable decline, with revenue per
available room levels down 20% to date, and cash flows expected to decline by at
least 35% from peak levels,' said Susan Merrick, Managing Director and U.S. CMBS
Group Head. 'With no immediate revival of demand in sight and recent-vintage
hotel loans unlikely to meet projected performance levels, loan sponsors are
increasingly depleting reserve accounts or are being forced to come out of
pocket to service debt shortfalls, each of which are a precursor to potential
future default.'

Last month, 13 hotel loans totaling $596 million defaulted. These included the
$190 million Pointe South Mountain Resort in Phoenix, AZ, the $117 million Loews
Lake Las Vegas in Las Vegas, NV, and the $100 million Dream Hotel located in New
York, NY.

Fitch expects hotel delinquencies to continue to grow, with an additional $608
million of Fitch-rated hotel loans 30 days past due as of June 30. Included in
this group were three notes totaling $293.8 million which correspond to
portfolios of Red Roof Inn properties, which Fitch expects will move into the
Index next month. Hotels will continue to be the most volatile property type,
due to their heavy reliance on business and personal discretionary income as
well as the daily resetting of rates.

The two largest retail defaults in June, the $207.2 million Woodbridge Center
loan and $164.5 million Jordan Creek loan, are sponsored by General Growth
Properties (GGP). Though performance at each of the properties was strong
throughout the term, each borrower's failure to repay the balloon amount upon
maturity resulted in their respective defaults, which will not be resolved until
further details emerge from the bankruptcy ruling. According to the cash
collateral agreement approved in bankruptcy court, GGP is required to remit
interest payments on all of the loans included in the filing. As a result, most
GGP-sponsored loans will not move into the Loan Delinquency Index until a
balloon default occurs at maturity. Four additional Fitch-rated loans included
in the bankruptcy, totaling approximately $227 million, mature in 2009. As of
the last reading, GGP-sponsored loans accounted for 12 bps in the Index.

As of June 30, 2009, the total balance of delinquent loans secured by retail
properties has surpassed that of multifamily-backed loans, at $3.95 billion and
$3.32 billion, respectively. Delinquency volumes for office, hotel, and
industrial loans stood at $1.94 billion, $1.58 billion, and $456.5 million,
respectively. When ranked by delinquencies within their individual property
types, multifamily led at 4.79%, followed by hotel at 3.04%, retail at 2.84%,
industrial at 1.83%, and office with only 1.28%.

Fitch's delinquency index includes 1,730 loans totaling $12.0 billion which are
at least 60 days delinquent or in foreclosure, out of the Fitch rated universe
of approximately 42,000 loans comprising $471 billion. The Index excludes
Fitch-rated loans that are 30 to 59 days delinquent, which currently total $5.7
billion.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings
Susan Merrick, 212-908-0725
Mary MacNeill, 212-908-0785 (New York)
Britt Johnson, 312-606-2341 (Chicago)
Media Relations:
Sandro Scenga, 212-908-0278 (New York)
sandro.scenga@fitchratings.com

Copyright Business Wire 2009