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Fitch: CMBS Delinquencies Keep Rising

NEW YORK CITY-The defaults on CMBS loans are expected to continue increasing throughout the year as fundamentals weaken, says the rating agency.

By Paul Bubny | Updated on January 21, 2009

NEW YORK CITY-Defaults on CMBS loans rose in the final weeks of 2008 and are expected to continue increasing through 2009, says Fitch Ratings. The rating agency reports that both the size and the frequency of delinquencies are on the rise.

The latest Fitch US CMBS loan delinquency index is 0.88% and the index is expected to reach 2% by year’s end. Fitch says the December increase was due largely to two loans with outstanding principal balances greater than $100 million, following a November reading which featured two defaults in excess of $70 million. Both loans of $100 million-plus were securitized in early 2008.

The loan delinquency index currently includes 20 loans with a balance of $25 million or more, and six of those loans became newly delinquent in December, according to Fitch. Excluding small balance loans, the average loan size of delinquencies within the Fitch-rated universe now stands at $8.2 million. A year earlier, the average was $6.4 million.

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