The cumulative default rate for fixed-rate commercial mortgage-backed securities (CMBS) increased to 13.2% in the second quarter of this year, a 25 basis-point rise from the first quarter, according to new data from Fitch Ratings, which earlier this year had predicted that cumulative defaults would reach 14.5% by year-end.
Newly defaulted CMBS loans for the second quarter totaled $2.1 billion. The majority of the defaulted loans – 113 out of 143 – were less than $15 million, with only 12 loans greater than $25 million (ranging between $33 million and $223 million).
Office and retail loans make up the largest components of new defaults at 44% and 34% by balance, respectively. By number of loans, retail leads with 60 newly defaulted loans with an average loan balance of $13.7 million, compared to 47 newly defaulted office loans with an average balance of $17.8 million. Hotel loans, which have one of the highest cumulative default rates, had only six newly defaulted loans in the second quarter.Â
An additional 88 loans, with an original securitized loan balance of $2.2 billion in Fitch Ratings' portfolio, did not refinance at their second-quarter maturity date. Seven of these loans – with a total of $139 million original securitized loan balance – have since paid in full, with four of them being in the multifamily sector. Of the loans that did not refinance, 50 were from the 2007 vintage.