CMBS Delinquencies Predicted to Double by 2012
According to credit-rating agency, Fitch Ratings, the climb in defaults spanning all property types resulted in a 42 basis point (bp) rise for a 2009 delinquency close-out at 4.71%. Predictions site a 2012 peak at 12%, according to Mary MacNeill, managing director of Fitch, who stated, “Though delinquencies have increased approximately five times from a year ago, they may not peak until 2012. An increased amount of loans are coming due over the next two years that will result in delinquencies possibly peaking at 12%.”
Current CMBS transaction ratings were translated with a higher delinquency rate by Fitch due to the future minded view of performance reflected in their surveillance criteria. This predicted rise will be impacted by falling rents and vacancy rates, affecting the five main property types as follows: Hotel, Office, Multi-Family, Industrial and Retail; Hotels being the highest in delinquency rate at 9.13%( $4.6 b), with Retail reporting the highest dollar amount of $5.7b (4.25%); and lowest reports Office properties with the lowest delinquency rate of 2.66% ($3.9b), compared to the Industrial property type having the lowest dollar amount of $851.3m (3.57%).
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