Steep drop in property values has rendered many landlords
unable to sell their buildings for enough money to repy
the debt they borrowed to buy them.
RESULT: REITS move higher
By Matt Jarzemsky
Dow Jones Newswires
Delinquencies of loans underlying U.S. commercial mortgage-backed securities continued their climb in September amid poor performance in economically challenged states such as Nevada and Hawaii, according to Fitch Ratings.
CMBS delinquencies have continued to rise this year after spiking in 2009 as commercial property owners increasingly fell behind on loan payments because falling occupancy rates and rents crimped cash flow. The steep drop in property values has rendered many landlords unable to sell their buildings for enough money to repy the debt they borrowed to buy them.
Fitch said the overall CMBS delinquency rate rose to 8.66% from 8.48% a month earlier.
Among property types, hotel continued to see the worst performance, with a rate of 21.3%, up from 20.8% in August. Office buildings had the lowest rate at 5.48%, up from 5.06% a month earlier.
Delinquencies on CMBS loans in Nevada were 25.9%, followed by Hawaii at 18% and Michigan at 15.7%. Ten states had a rate of at least 10%.