Fitch Inc. said Monday that U.S. commercial mortgage-backed securities delinquencies continued to climb in October, with the hotel sector having the highest delinquency rate, although office delinquencies showed the biggest rise.
The delinquency rate rose to 3.86% last month from 3.58% in September and 3.04% in August. The hotel sector led with a delinquency rate of 6.81%, followed by the multifamily sector at 6%. Retail was the third largest, at 3.55%.
Office delinquencies were up 19%, although by property type they had the lowest delinquency rate at 2.29%. Contributing to the increase were three delinquent loans of more than $50 million, the largest a $165 million loan to Maguire Properties Inc.
"Though longer leases on office properties have historically mitigated sharp changes in performance, continued job losses are expected to increase pressure on the office sector," said Susan Merrick, managing director and head of Fitch's U.S. commercial mortgage-backed securities group. "With the looming possibility of leases expiring on space underutilized by companies that have downsized, office performance may not reach a trough for a few years."
Hotel delinquencies were up nearly 17%, with nine delinquent loans of more than $100 million. Newly delinquent loans include three related Red Roof Inn loans totaling $292.8 million.
The largest new delinquency was for a multifamily housing project in the Harlem section of New York, Riverton Apartments, on a $225 million loan.
By dollar balance, retail loans continued to lead delinquencies at $4.9 billion, unchanged from September.
CMBS issues from 2006 and 2007 showed the most dramatic increases in delinquencies.