Fitch: Sizeable REO Dispositions Drive U.S. CMBS Delinquencies Lower

Summary:  CMBS delinquencies fell in Industrial, Hotel, Office, Multifamily, and Retail sectors according to Fitch, driven by large REO dispositions.

NEW YORK--(BUSINESS WIRE)--

The U.S. CMBS delinquency rate continued its steady improvement last month driven by large REO dispositions, according to the latest index results from Fitch Ratings.

CMBS late-pays fell 11 basis points (bps) in September to 6.57% from 6.68% a month earlier. The drop was led by the sale of the Granite Run Mall, while the sale of another large troubled asset appears imminent. The Granite Run Mall was previously the fourth largest loan in COMM 2006-C7 and represented 5.5% of the deal. Meanwhile, Fitch awaits the sale of another troubled mall: Gwinnett Place in Duluth, GA. The asset represents the fifth largest in MLMT 2007-C1, comprising roughly 4% of the deal.

CMBS delinquencies will continue to move lower as assets become REO and are disposed of. In fact, the percentage of REO assets in Fitch's delinquency index exceeded 50% for the first time in the index's history last month. This compares to 37% one year ago.

Current and previous delinquency rates are as follows:

--Industrial: 9.57% (from 9.41% in August);

--Hotel: 7.52% (from 7.68%);

--Office: 7.41% (from 7.56%);

--Multifamily: 6.95% (from 7.30%);

--Retail: 6.11% (from 6.23%).