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CMBS Delinquencies Post First Increase in Six Months
Fitch Ratings’ U.S. CMBS delinquency rate rose two basis points to 4.12% in April due to a spike in new delinquencies, which was partially offset by strong new issuance volume. This is the first increase after five consecutive months of decline.
However, the rating agency said it had anticipated that the overall delinquency rate would be volatile as stimulus burns off and coronavirus debt relief expires.
New delinquencies rose to $1.6 billion in April from $697 million in March with approximately 37% previously having been granted relief. Many of the larger newly delinquent loans have become 60 days delinquent for at least a second time, with borrowers requesting additional debt relief.
A case in point is the month’s largest new delinquency, the $171-million Empire Hotel & Retail loan collateralized by a property on Manhattan’s Upper West Side, which became 60 days delinquent for a second time after being brought current last August.
That being said, despite April’s largest new delinquency occurring in the hotel sector, lodging delinquencies actually ticked downward 42 bps to 16.3%. Fitch notes that the improvement reflects relief being granted by servicers through the application of reserve funds to repay past due debt service.
Hotel remains far and away the sector with the highest delinquency rate, followed by retail at 9.37%, up 36 bps from March. Delinquencies for industrial and multifamily remain below 1%, with office slightly higher at 1.67% as of April 30.
