The lowering of CMBS tenant credit that started in April has continued to worsen with the Standard & Poor’s downgrade of J.C. Penney, according to the rating agency’s structured finance credit review emailed this morning. S&P said that the weighted average tenant rating is now close to ‘BB-‘.
In other commercial real estate indicators, S&P added that the U.S. hotel revenue per available room or RevPAR fell 0.8% year-over-year for the week ending July 7. S&P attributed the decrease to the mid-week July 4 holiday. The RevPAR is used as a hotel sector performance metric calculated by multiplying a hotel's average daily room rate by its occupancy rate.
Meanwhile, on a more positive note, the national retail vacancy rate lessened by 0.1% in 2Q12, S&P stated. However, the regional performance revealed a wide variation.
In other consumer credit indicators cited by S&P, the Manheim Used Vehicle Value Index dropped 1.4% in June and is now down 3.2% from last year, although it is still close to historic highs.
S&P stated that used vehicle sales declined 2.5% in June from a year ago, but were up 4.1% year-to-date.
Meanwhile, Nomura Securities pointed to auto sales showing increases with June numbers rising to 14.05 million units from 13.73 million units in the previous month. Year-on-year, Nomura cited that auto sales have been rising at a fast pace and increased 23% in June as the auto sales in 2Q11 and 3Q11 experienced some disruptions in terms of supply because of the Japanese earthquake and Thai floods. Auto sales have remained strong in 2012 because of the availability of easier credit and pent-up demand because of low sales in the previous three years as well as the rising need to replace older cars.
In the credit card sector, Nomura noted that the sector grew at an annual rate of 11.2% in May on a seasonally adjusted basis to $870.2 billion while year-on-year it increased by 1.6%.
The firm noted that revolving credit growth has somewhat accelerated in the past six months, but analysts projected that full-year growth will be at the high end of the 1%-2% range. They attributed the slower growth in revolving credit to the weak job market numbers in the last three months while retail sales have also decelerated. As a result, analysts believe that revolving credit growth will likely slow down as well.