Fitch Ratings: Dramatic $348MM Rise In CMBS Delinquencies.Business Editors NEW YORK--(BUSINESS WIRE)--April 16, 2003 First quarter delinquent commercial mortgage-backed securities Commercial mortgage-backed securities (CMBS) are a type of bond commonly issued in American security markets. They are a type of Mortgage-backed security which are backed by mortgages on commercial rather than residential real estate. (CMBS CMBS See: Commercial Mortgage Backed Securities ) loan balances grew by more than 14% over year-end 2002, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the latest Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. Loan Delinquency Index (the Index) released today. The rise to 1.39% from the previous Index of 1.31% is the largest quarterly increase since the Index was created at year end 2001. 'The increase in CMBS delinquencies is directly due to a dramatic rise in delinquent hotel and office loans,' said Mary MacNeill, Senior Director, Fitch Ratings. The most substantial increase in delinquents occurred in hotel loans. The delinquency balance for hotel loans grew by $270 million in the first quarter, a 37% increase over year-end. At slightly more than $1 billion, hotel loans account for approximately 35% of the $2.8 billion in delinquent CMBS loans. MacNeill noted the vulnerability of hotels in the wake of declining corporate and vacation travelers, factors driven by poor economic conditions and uncertainty over future geopolitical ge·o·pol·i·tics n. (used with a sing. verb) 1. The study of the relationship among politics and geography, demography, and economics, especially with respect to the foreign policy of a nation. 2. a. event risks. 'Fitch is quite certain that delinquencies within the hotel sector will continue to rise, given the number of hotel loans Fitch analysts have under review,' said MacNeill. The delinquent office loan balance grew by 30% in the 1st quarter, from $200 million to $260 million. While office loans make up only 9% of the total delinquent balance, Fitch anticipates a continued rise in office loan delinquencies through, at best, mid-year 2004. 'Fitch had predicted the declining performance in office loans,' said MacNeill. 'The high vacancy rates and lowered rents most markets are experiencing are the consequences of what has now become an extended economic downturn.' Within the other property sectors, retail and industrial delinquent balances in the first quarter grew by 5% and 7%, respectively. Delinquent multifamily loans Multifamily loans Loans usually represented by conventional mortgages on multi-family rental apartments. declined by 4%. Together, those three property types account for 42% of the delinquent balance. The Fitch Index is calculated on the balance of loans 60 or more days delinquent, and includes properties in foreclosure foreclosure Legal proceeding by which a borrower's rights to a mortgaged property may be extinguished if the borrower fails to live up to the obligations agreed to in the loan contract. and real estate owned Real Estate Owned Property owned by a lender - usually a bank - after an unsuccessful sale at a foreclosure auction. This is common because most of the properties up for sale at these auctions are worth less than the total amount owed to the bank: the minimum bid in most , in the 372 transactions monitored by Fitch analysts. Loans less than 60 days delinquent are excluded from the Index. Previous Fitch research has shown loans 60 or more days delinquent better demonstrate default trends. Fitch's CMBS Loan Delinquency Index is available on the Fitch Ratings web site at 'www.fitchratings.com'. |
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