NEW YORK CITY-The delinquency for CMBS in the US could fall below 4% by year’s end, about half the late-pay rate seen at the start of 2013 and the lowest since October 2009, says Fitch Ratings. That’s provided the pace of resolutions continues and new issuance remain strong, in proportion with portfolio runoff.
Further, locally based Fitch assumes resolutions for loans less than $100 million would remain at their 2013 pace, while resolution timing for loans greater than $100 million will be considered on a case-by-case basis. The expected 4% mark also assumes that the $3-billion loan on the Peter Cooper Village/Stuyvesant Town multifamily complex in Manhattan’s Midtown South will not be resolved this year.
CWCapital, the servicer on the Stuy-Town loan, is expected to market the asset in mid-2014. Given the size of the asset, lining up a buyer and the complexities of bringing a sale to completion, Fitch is assuming that it may not occur until 2015. If a ‘14 resolution did occur, the delinquency rate overall could fall to below 3.5% by year’s end.
Even without a resolution to the Stuy-Town loan, though, Fitch cites several key factors as likely contributors to a drop in CMBS delinquencies this year. Notably, the CWCapital bulk asset sales, first announced this past October, could shave the delinquency rate by roughly 50 basis points lower within just the next couple of months.
In addition, the inventory of REO assets has grown to over 50% of all delinquent loans now tracked by Fitch. As these assets are sold off, the late-pay rate will decline sharply.
Finally, the volume of Fitch-rated loans maturing in ‘14 will be relatively small, at less than $20 billion, consisting mostly of loans originated in 2004 and 2005 with coupons over 5.5%. This should result in only a modest number of new maturity defaults, although the approximately $3.3 billion in Fitch-rated, seven-year loans originated in 2007 will be monitored closely.
By property type, hotels could potentially see the largest drop in delinquencies this year, according to Fitch. Relative to the size of its universe, lodging has a disproportionately large share of REO assets valued at more than $100 million. Most of those assets are expected to be sold in ’14, which could send the hotel late-pay rate down almost four percentage points to around 3% by year end.
Delinquency rates for the other major property types are expected to fall by around two percentage points each this year. However, the multifamily late-pay rate stands to see a nearly 5.5-percentage point drop should the Stuy-Town loan be resolved by the end of '14.
No comments:
Post a Comment