U.S. CMBS delinquencies reach new low

The volume of delinquent conduit loans in the United States fell to 0.28% in October, down by one basis point from the previous month, reports Fitch Ratings. The hotel sector continues to cause the most concern of all collateral types for U.S. commercial mortgage-backed securities but showed some improvement.

Hotels fell to 5.4% of the total volume of delinquent loans in October from 13.6% in September. The decline in hotel delinquency was driven primarily by the resolution of a large hotel in New Orleans, as the hotel’s $83.3 million loan was assumed and brought current, though it has yet to be transferred back to the master servicer.

Across all property sectors, Fitch found that 1998 and 1999 securitizations accounted for 33.2% of all delinquencies as of October, though the vintages accounted for only 10.8% of Fitch-rated transactions. Furthermore, as a percentage of the 1998 and 1999 vintage universe, the October 2007 delinquencies account for 0.86%, significantly higher than the overall index.

‘The delinquencies in 1998 and 1999 vintages are consistent with historic loan delinquency pattern,” says Michelle Bayard, a director at Fitch.

“Delinquencies typically peak in the eighth year after issuance. However, Fitch is concerned that most of these 1998 and 1999 loans are scheduled to mature within the next two years,” says Bayard.

For the fourth month in a row, the multifamily sector posted a rise in delinquencies. In October, the net increase of 8.5% or $42.2 million for apartment delinquencies was due to 29 newly delinquent loans that collectively comprised $96.3 million. Another sector that experienced an increase in delinquencies was health care, which ended October with $19.5 million in delinquent loans, up from $5.7 million in September. Three non-performing matured loans were added in October.

The seasoned delinquency index, which omits transactions with less than one year of seasoning, dropped by three basis points to 0.35% in October. The seasoned index is also affected by the addition of deals as they age. In October, six transactions totaling $13 billion became newly seasoned. None of the newly seasoned transactions have delinquent loans.
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