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Hotel Lates Defy CMBS Performance

Mortgage News

Although the performance of securitized commercial mortgages backed by hotels has the highest delinquency rate of all categories, hotel loans saw a drop in delinquency. But the story was different for most other types of commercial real estate issuances.

The rate of delinquency on commercial mortgages included in commercial mortgage-backed securities was 9.18 percent during February, based on Moody’s Investors Service’s Delinquency Tracker. Last month’s delinquency reflected 4,112 loans for $56.8 billion.

Loans that became newly delinquent last month amounted to $4.1 billion, while $3.0 billion in previously delinquent loans were cured.

The report reflects data from loans in conduit-fusion transactions that were securitized since 1998.

The prior month’s default rate was lower at 9.01 percent, while CMBS delinquency stood at just 5.73 percent in February 2010.

Moody’s Director of Commercial Real Estate Research Tad Philipp noted in the report that further deterioration can be expected based on a specially serviced loan rate that is 3.3 percent above the delinquent loan rate.

By sector, loans backed by hotels had the highest delinquency: 16.41 percent. But that was an improvement from 16.75 percent in January and only the third time in two years that the hotel rate was lower.

Not far behind was multifamily delinquency, which jumped 33 basis points to 15.92 percent in February.

Late payments on industrial property loans jumped more than any other sector — 113 BPS — to end last month at 10.26 percent.

Like hotel loans, retail property delinquency was lower — easing 2 BPS to 7.25 percent.

Delinquency on mortgages financing office properties was 6.77 percent, up from 6.43 percent the month before. Still, office delinquency was the lowest of all CMBS types.

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