Fitch: Five-Year Loans Drive U.S. CMBS Delinquencies Higher NEW RECORD!

NEW YORK--(BUSINESS WIRE)--Upcoming maturities from U.S. CMBS (Commercial Mortgage Backed Securities) deals originated in 2005 contributed to a 29 basis-point (bp) increase in delinquencies to 6.29% at the end of February, according to the latest U.S. CMBS delinquency index results from Fitch Ratings. 6.29% is a new record.

Approximately 30% of the newly delinquent loans were from 2005 transactions. In fact, the four largest newly delinquent loans (ranging in size from $65 million to $112 million) are from this vintage. Three of these four loans are past their 2010 maturity dates and are, therefore, categorized as non-performing matured loans.

'Five-year loans originated in 2005 will continue to have difficulty refinancing this year as liquidity remains limited,' according to Managing Director Mary MacNeill. 'In many cases, sponsors will have to either contribute additional equity in order to refinance their loans or look to the servicers for extensions and modifications.'

For the first time, office properties saw a greater than overall average increase in the index, with a 45 bp movement month over month in comparison to the overall index of 29 bps as three of the top four newly delinquent loans are office properties. Multifamily and industrial also exceeded the overall index change at 64 and 43 bps respectively. When the Peter Cooper Village/Stuyvesant Town loan hits 60 days delinquent, the overall index will increase 60 bps and multifamily will increase by over 400 bps.

Current delinquency rates by property type are as follows:
--Office: 3.50%;
--Hotel: 16.61%;
--Retail: 5.09%;
--Multifamily: 8.97%;
--Industrial: 4.16%.

Fitch's delinquency index includes 2,505 loans totaling $28.5 billion of the Fitch rated universe of approximately 42,000 loans comprising $452.6 billion that are at least 60 days delinquent or in foreclosure. The Index excludes Fitch-rated loans that are 30 to 59 days delinquent, which currently total $3.2 billion.

Additional information is available in Fitch's weekly e-newsletter, 'U.S. CMBS Market Trends'

CNBC, Larry Summers, Christina Romer and Tim Geithner (Fab Four) will require a few hours to digest this new record prior to spinning it into a positive economic sign. It is challenging for the Fab Four to “seasonally adjust” delinquency figures.

The equity market and specifically the REITS will likely move higher as all "new records" automatically kick in the Quant Fund buy programs.