CREL CDOs delinquencies dropped for the third consecutive month, the latest index results from Fitch Ratings showed.
The July delinquencies dropped to 11.8% from 12.6% in June. Additionally, asset managers said there were 12 new delinquent assets last month, which included nine newly impaired CMBS bonds.
While new delinquencies made up a term default, two matured balloons, and nine impaired securities, 14 previously delinquent assets were taken out from the index, Fitch said.
However, certain loans that were brought current or extended might come back and cause CRE CDO delinquencies to increase "if these workouts prove to only postpone an inevitable default," Fitch Director Stacey McGovern said.
In July, CREL CDO asset managers said there were roughly $31 million in realized losses. The highest lost reported was with the discounted sale of a participation in a loan backed by a recently constructed hotel in Atlantic City, NJ.
Office, the largest property type at 24% by balance, is still the lowest delinquency rate among all property types.
Conversely, loans from non-cash flowing property types such as land, condominium conversions, and construction have the highest delinquency rates.