CMBS delinquency rates improve, except for retail property loans
With the exception of the troubled retail sector, delinquency rates across property types supporting commercial mortgage-backed securities were mostly flat to declining in February compared with January, Fitch Ratings said.
February's total delinquency rate was 3.01%, down from 3.12% in January and 3.37% in February 2017. It was the eighth consecutive month of improved performance, the ratings agency said in a press release.
The retail sector had a 5.83% delinquency rate in February, the highest among all the property types. This was up from 5.77% in January and 5.35% one year ago.
There were a number of high-profile bankruptcy filings among retailers last year, including Toys R Us, which previously announced plans to close some of its stores but is now on the verge of liquidating all of its properties; others like Sears, J.C. Penney and Macy's announced store closings.
Still, the regional mall delinquency rate was 4.4%, down from 4.81% the previous month due to new mall loan issuance. Loans secured by regional mall properties account for approximately 33% of the overall retail universe but 25% of total overall retail delinquencies, Fitch said.
In dollar terms, there were $11.25 billion of delinquent mortgages supporting Fitch-rated CMBS as of Feb. 28, down from $11.64 billion on Jan. 31. Mortgages with an approximate balance of $480 million had some kind of resolution during the month, offsetting the $138 million of new delinquencies. Fitch rated $2.7 billion in three new issuances during February, while there was runoff of $2 billion.
Loans secured by office properties had the largest decline in the delinquency rate from the previous month, to 4.51% from 4.9% in January; in February 2017, the delinquency rate was 5.41%.
The largest resolution last month was the $90 million Wells Fargo Place loan, which was secured by an office property in St. Paul, Minn. The loan was repaid in full in January 2018, after its original November 2016 scheduled maturity.
Industrial property mortgage delinquencies for February were 3.14%, down from 3.39% in January and February 2017's 4.3%.
There was a 2.67% delinquency rate for hotel loans, down from 2.89% in January and 3.28% one year prior.
Mixed-use properties had a 2-basis-point drop in its delinquency rate from January to 2.72%, while for multifamily properties there was a 2-basis-point increase to 0.48%. But both were improved from their rates for February 2017 of 3.28% and 0.75%, respectively.
The delinquency rate for other property types was 0.86%, down 1 basis point from January but up 16 basis points from one year ago.