Many leases signed during the height of the market are coming due. Perfect time to have a market analysis done and see if your current rates need renegotiated.
Delinquencies for office and retail loans have hit their highest-ever levels while overall U.S. CMBS delinquencies fell for the sixth straight month, according to the latest index results from Fitch Ratings.
CMBS late-pays declined five basis points (bps) in January to 8.32% from 8.37% a month earlier. The improvement was driven by multifamily loans, which saw a 165-bp plunge in its rate month-over-month to 12.77%. The delinquency rates for office and retail rose to all-time highs of 7.30% and 7.21%, respectively.
January marked the first time post-recession that the office delinquency rate surpassed that of retail. Office is the only major property type that Fitch Ratings has a negative outlook on for 2012. Office delinquencies are expected to continue rising as leases made at the height of the real estate boom roll to market, impacting income available to cover debt service.
New delinquencies were led by 5-year, interest-only loans from the 2007 vintage that failed to pay off at maturity and have subsequently stopped paying interest. Notably, no new loans of more than $100 million were added to the index in January. In part, this was due to Fitch Ratings excluding from the index several large loans (over $500 million in total) that were reported as non-performing matured balloons for the first time in January, but which remained current on interest despite not satisfying their scheduled balloon payments.
The downturn in office and retail performance comes as multifamily and hotel loans have shown the best performance rebound during the past 24 months.
In fact, the multifamily delinquency rate has fallen 4.63 percentage points from one year ago to 12.77% from 17.40%. Month-over-month, the decline was led by the $375 million loan on The Belnord, a luxury apartment building on Manhattan's Upper West Side, dropping out of the index. Previously, the loan was more than 90 days delinquent, but the borrower was able to use reserve funds to bring the loan current. Based on the remaining reserve balance and in-place cash flow, Fitch Ratings expects the loan to remain current for roughly four more months, with the loan likely to re-enter the index sometime over the summer unless cash flow improves.
Current and prior month delinquency rates for the major property types are as follows:
Multifamily: 12.77% (from 14.42% in December),
Hotel: 12.21% (from 12.02%),
Industrial: 10.40% (from 10.25%),
Office: 7.30% (from 6.84%), and
Retail: 7.21% (from 6.89%).
Read more: http://www.costar.com/News/Article/Office-Retail-Delinquencies-Hit-New-Highs;-Could-Go-Higher/135851
0 comments:
Post a Comment