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U.S. CMBS Delinquencies Rise Ever So Slightly

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U.S. CMBS delinquencies rose during March by a measly three basis points bringing the delinquency rate to a still microscopic 0.33 percent. So far, commercial real estate has been weathering the credit crunch quite well. There's belief in the market that delinquencies will rise more than this. But the predictions of massive delinquencies and defaults don't seem to be coming true. At least not yet.

According to Fitch Ratings' CMBS delinquency index, the delinquency rate rose by three basis points, to 0.33%, in March, the second monthly increase in a row.

“At this point, there is not cause for alarm,” Susan Merrick, managing director and CMBS group head, said in an interview. Although the delinquency rate is expected to rise to about 1% over the course of this year, Ms. Merrick said it will still be “just a bit above the historic average.”

There was some bad news for the CMBS market. Fitch noted an uptick in loans underlying the CMBS that are not refinancing precisely at their maturity date, thus putting them in non-performing status. The number of non-performing matured loans—that is, loans at least a year old—increased to 11.6% of the Fitch delinquency index in March, compared with 2.9% a year ago.

But Ms. Merrick said the 11.6% of non-performing matured loans at the end of March “is not substantial, given the very low base it has risen from.”

Link. (Spotted at Deal Junkie.)

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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