Delinquencies on U.S. commercial mortgage-backed securities (CMBS) finished last year with a fifth straight month of declines, according to the latest delinquency index results from Fitch Ratings. However, office delinquencies are continuing on an upward trajectory.
CMBS late pays declined 4 basis points (bps) in December to 8.37% from 8.41% a month earlier. However, office delinquencies climbed to 6.84%, exceeding their previous high of 6.64% set in July 2011. Retail delinquencies are up from November's levels. Conversely, delinquencies improved most notably for hotel and multifamily loans, with rates down from both year-end 2010 and their respective peaks.
Within the commercial real estate sectors, the office sector saw rising delinquency levels: 6.84% in December, up from November's 6.84% level and up from the December 2010 level of 5.69%. According to Fitch, the increase in office late pays was led by the $363 million Bank of America Plaza loan, secured by a 55-story office tower in Atlanta, which became 60 days delinquent in December.
Despite remaining the highest rate, multifamily delinquencies have fallen the second most of any major property type, surpassed only by hotels. After peaking at 17.58% in February, multifamily delinquencies finished 2011 at 14.42%, a level not seen since September 2010. In comparison, hotels reached a delinquency peak of 21.31% in September 2010 and ended 2011 at 12.02%.
Retail properties finished 2011 at 6.89%, after closing out 2010 at a peak delinquency rate of 7.20%. Despite the year-over-year drop, the December retail delinquency rate rose 26 bps.
Fitch Ratings' delinquency index includes 2,564 loans totaling $33.6 billion.