An increase in monthly commercial mortgage-backed securities delinquencies in Fitch Ratings’ latest report adds to evidence suggesting that improvements in late payments seen in October were due primary to the influence of an extraordinary loan resolution.
An 18-basis point increase to 7.96% in November in Fitch’s delinquency index of loans at least 60 days delinquent or in foreclosure follows October's one-time decline driven primarily by the Extended Stay America loan resolution.
According to Fitch, the increase in U.S. CMBS delinquencies in November was largely due to new defaults on office-and retail-backed loans. Of the 10 loans greater than $50 million that became newly delinquent last month, nine corresponded to office or retail properties.
Data providers differ in terms of when they include or exclude loans of unusual size in their numbers. Fitch includes these loans if they are in its rated pools but makes note of their influence if they feel it is significant.
Like some other data providers, Fitch noted that while office and retail had been performing relatively well because of their generally longer-term lease agreements, now that leases are coming up for renewal these property sectors are starting to be marked down to lower market rents.
The economy has been showing some signs of possible recovery that ultimately could be favorable for commercial real estate, including a relatively favorable consumer sentiment report Friday morning. But CRE generally lags other sectors of the market in recovering.