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February Sees Modest Decline In CMBS Delinquencies

RBS Greenwich Capital reports that commercial mortgage backed securities (CMBS) delinquencies fell by five basis points to 1.71% in February, down sharply from its 2.44% level in February 2004. Delinquent loans totaled $4.16 billion in February, also down from January’s $4.23 billion and $4.80 billion in February 2004.

Year-over-year declines in the 30-and 60-day delinquency slots of 38.6% and 36.8% suggest that new delinquencies and defaults are slowing, however. Certain vintages stand out: 1997 and 2000, for example, continue to be the performance outliers as delinquencies on these pools are higher than surrounding vintages. Conversely, the retail delinquency rate for February was 82 basis points lower than February 2004’s level.

While RBS Greenwich Capital writes, “there’s a lot of good retail news,” the firm cautions that single-tenant and grocery-anchored retail are “more at risk than others.” The report cites two recent examples—Standard & Poor’s placed supermarket operators Albertsons, Krogers and Safeway on CreditWatch with negative implications. Multifamily posted the highest delinquency rate in February. Still, it also posted the lowest loss severity of the four asset types at 26.7%.

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