Loan Delinquencies Down Again for U.S. CMBS

NEW YORK – Delinquencies for U.S. commercial mortgage-backed securities continue to trickle downward and likely will for the rest of 2005, according to Fitch Ratings Loan Delinquency Index.

With a one basis point (bp) drop to 1.22% as of the March 2005 update, CMBS delinquencies are 31 bps below the March 2004 index and continue the downward trend in loan delinquencies Fitch has been reporting since August 2004. ‘Fitch expects to see a continuing overall decline in the delinquency index over the remainder of 2005 as real estate fundamentals are improving across all property types and in almost all markets,’ said Mary O’Rourke, Senior Director, Fitch Ratings.

While office and industrial loans remained substantially unchanged, there was a small gain in delinquent multifamily loans, and a corresponding decline in retail delinquents. ‘While retail collateral performance in CMBS transactions has been steadily improving, recent interest rate hikes, along with inflation and rising gasoline prices, could have an effect on retail consumer spending,’ said O’Rourke.

Fitch uses the minimum 60-day delinquent criteria to determine inclusion in the study. Overall, the seasoned delinquency Index declined from 1.59% to 1.50%. The seasoned index omits transactions with less than one year of seasoning.