First-quarter cumulative defaults for fixed-rate commercial mortgage-backed securities were up 18 basis points from the end of 2012 at 13.6%, primarily due to continuing office property concerns, according to Fitch Ratings.
Office properties, which have led defaults for two years, continued to do so in the first quarter when they represented 55% of defaults by loan balance. (Defaulted loan sizes in this category range from $1.4 million to $130.4 million.)
“Office will continue to lead CMBS defaults in the near term as leases signed at the height of the market are rolling into lower rent environments and tenants reduce space,” Fitch said in its report.
Fitch researchers noted in the report that more large balance loans have defaulted in the first quarter compared to a year ago. There were $2 billion (101 loans) of these during the first three months of 2013, compared to $1.7 billion (155 loans) in the first quarter of 2012.