Fitch: CMBS Late-Pays Overall Drop, But Remain High in Some Areas

U.S. CMBS delinquencies declined for the eighth month in a row, hitting the lowest level since the fall of 2010 in Fitch’s latest index data, but the company notes that there is at least one problem spot where losses are still soaring.

Late payments on CMBS overall in January dropped by eight basis points to 7.91%, the lowest percentage seen since October 2010 when late-pays came in at 7.78%.

But in Georgia delinquencies are still soaring at 20%, with two of the largest loans entering Fitch’s delinquency index—the $71.1 million Millennium in Midtown (which collateralizes a 2006 Goldman Sachs deal) and the $67.7 million Southlake Mall (which is part of a 2007 Bear Stearns deal)—located in Atlanta. Nevada has an even higher delinquency rate at 20.7%.

When asked why concerns persist in Atlanta, for example, Fitch director Scott Pritchard told this publication,"New  supply  in  Atlanta  has  caused  office  vacancies to far exceed the national average."

Pritchard said eventually the regional office sector concern will experience some relative improvement. "The  recession, however, is helping to keep new construction in check so office vacancies should fall back below 20% longer-term," he said.

It also is worth noting that "Atlanta  has  been no exception to the flight-to-quality trend, with newer offices faring much better than older product," said Pritchard.

Overall CMBS delinquencies by property type in the latest month were as follows: multifamily loans dropped to 9.73% from 10.12%, hotel loans fell to 8.76% from 8.87%, industrial loans inched up to 8.69% from 8.61%, office loans declined to 8.33% from 8.41%, and retail loans increased to 7.43% from 7.14%.