S&P: Commercial Loan Performance Improved

The credit performance of U.S. commercial mortgage loans improved markedly in 2004, according to a recent report by Standard & Poor's Ratings Services.The study found that there were only 306 additional defaults in 2004 among the 29,827 loans originated between 1993 and 2002 that were pooled for S&P-rated commercial mortgage-backed securities issued in the United States. The increase was 24% fewer than the 404 defaults in 2003, S&P said. The study, "Defaults and Losses of Standard & Poor's Rated U.S. Commercial Mortgage Loans: Year-End 2004," was authored by Dr. Joseph Hu, research head of S&P's Global Real Estate Finance group, and Roy Chun, head of CMBS Surveillance. "The 1995-1997 vintages continued to be the worst performers, with cumulative default rates of 8.92% to 9.56%, an increase of between 81 and 128 basis points from year-end 2003," said Dr. Hu. "Holding seasoning constant, however, the 2000 vintage, now in its fifth year, continued to have the worse cumulative default rate at 6.12%." S&P can be found online at http://www.standardandpoors.com.