Late-Pays in CMBS Dip Below 5%

Thanks to resolutions from a single 2007-vintage deal, JPMCC 2007-LDP10, US CMBS delinquencies in May fell to a level not seen since December 2009, Fitch Ratings said Monday. The rate of Fitch-rated late pays inched down 16 basis points from the previous month to 4.97%, the first time it has dipped below 5% in more than four years.

The largest resolutions in May by loan balance included two from JPMCC 2007-LDP10: the $103.5-million Long Island Marriott and Conference Center, which was resolved with a 40% loss; and the $55-million Overland Park Trade Center, resolved with a 67% loss. Other large resolutions included the $89.4-million Gateway I, from MSCI 2007-IQ13; and the $73.6- million Islandia Shopping Center, from LBUBS 2007-C6, both of which were brought current.

It was another ’07-vintage JPMorgan Chase CMBS loan that figured in May’s largest new delinquency, the $60-million Clark Tower loan, securitized under JPMCC 2007-CIBC20. However, Fitch notes that the loan has been in special servicing since last September.

In total, resolutions of $967 million in May outpaced new additions to the index of $465 million. Fitch-rated new issuance volume of $3.7 billion outpaced $3 billion in portfolio runoff, leading to a slight increase in the index denominator.

By property type, industrial experienced the largest decline in delinquencies last month, dropping 24 bps to 6.43%. It was followed closely by office at 21 bps to 5.43%.

Retail improved by a more modest 13 bps to 4.98%, while the multifamily and hotel rates improved by five and six bps, respectively, to 5.92% and 5.12%, respectively. ?Fitch’s delinquency index includes 1,446 loans totaling $19.7 billion that are currently at least 60 days delinquent, in foreclosure or REO, or considered non-performing matured out of the outstanding rated universe of approximately 30,000 loans comprising $395.6 billion.?

Fitch maintains a “stable” outlook on approximately 83% of its US CMBS portfolio by balance. Most of the remaining bonds either are considered distressed (9%) or have a “negative” outlook (8%).