CMBS Delinquencies Soaring

Delinquent CMBS rose to 3.04% at the end of July which represents a jump of 0.5% in one month according to Fitch Ratings.

Here is the company’s summary of the current situation and trend:

‘For the past several months, delinquencies have increased at a rate of over $2 billion per month; the 30-to-60 day rollover rate has consistently exceeded 50%, and resolutions from the index have been slow due to the lack of refinancings and dispositions,’ said Mary MacNeill, Managing Director of Fitch’s U.S. CMBS Group. ‘If current trends continue, delinquencies are likely to pass 5% by the end of 2009, though the likelihood of large recent vintage proforma loans depleting their debt service reserves by year-end could drive the percentage of delinquent loans past 6% by first-quarter 2010.’

Breaking down the delinquencies by product type they show that $4.4 billion delinquent retail loans, $3.5 billion multifamily, $2.3 billion office, 2.2 billion hotel and $510 million commercial delinquencies. Within their product types, 5.03% of multifamily loans were delinquent and 4.3% of hotel loans, 3.5% of retail loans, 2.07% of industrial loans and1.54% of office loans were delinquent.

These numbers are beginning to look like those of residential real estate, aren’t they. This is going to be a significant drag on any recovery and as I’ve said before a real disaster for smaller banks.

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