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Reports: CMBS Delinquencies Soar in Q1

NEW YORK CITY-Late payments on CMBS loans have tripled, says Reis Inc., while Fitch reports a 500% gain in the volume of special-serviced loans.

By Paul Bubny | Updated on May 03, 2009

NEW YORK CITY-In describing the increase in CMBS loans going into special servicing, Fitch Ratings uses the term “rising tide,” and that phrase could also apply to the Q1 jump in CMBS delinquencies. National default and delinquency rates for CMBS rose to 1.76%, or $10.7 billion, in the first quarter, up 62 basis points from the previous quarter’s rate of 1.14% and more than triple the rate of delinquencies recorded in Q1 2008, according to a report Reis Inc. released on Friday. The rate could reach 6% by year’s end.

Although more than one-third of delinquent CMBS loans occur in multifamily, “weakness was pervasive across all sectors” in Q1, according to the Reis report. Retail loans, with a delinquency/default rate of 1.62%, add $2.87 billion to the total, followed by office CMBS loans at $1.88 billion and a delinquency/default rate of 1.12%. In multifamily, the delinquency/default rate is 3%.

Among metro areas, Detroit has the highest CMBS delinquency/default rate at 5.72%, an increase of more than 300% from the rate of 1.61% a year ago and nearly double the previous quarter’s rate of 3.13%, according to Reis. More than 14% of CMBS-backed multifamily property loans in Detroit are in delinquency.

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