Fitch Ratings found delinquencies on loans underlying commercial mortgage-backed securities declined for the second month in a row in September as its numbers bore out what the company has identified as a trend toward improvement in the hotel sector.
“Hotel properties were first to decline and are now the first to rebound from the recession, though improvements have lagged for both business and leisure travel due to slow job growth,” said Mary MacNeill, managing director at Fitch, in an e-mail response to a question from this publication.
The delinquency rate on CMBS loans backed by hotels dropped to 12.4% from 14% during the month. Overall, CMBS delinquencies fell to 8.6% in September from 8.65% in August. They have been dropping since they hit a peak of 9.01% in July.
While prospects are improving for the hotel sector, other property types are not necessarily faring as well, according to Fitch.
The latest month's numbers also bear out expectations that CMBS loans backed by office properties will continue to deteriorate in the long run. Delinquencies in this category increased to 6.61% from 6.13%.
Delinquency trends in the CMBS office loan sector have been mixed month-to-month but over the course of the last 12 months generally have increased, rising to 6.61% from 5.48% in September of 2010. But delinquency rates in this sector during the last two months have been below the 6.64% delinquency rate it had in July, statistics provided by a Fitch spokesman show.
“Fitch has been and will remain cautious on office properties,” said MacNeill. She said loan defaults are likely to trend higher “as higher leases continue to roll to market.”
