US Commercial RE Roll Rates Suggest Higher Delinquencies
The trend on roll rates on US commercial real estate loans are worrisome, according to a new report from Fitch. Roll rates from from June to July on delinquent loans moving from 30-days to 60 days in Fitch-rated transactions were 54%, marking the tenth straight month that over 50% of the 30 day delinquencies moved to 60 days delinquent.
‘As commercial real estate fundamentals continue to deteriorate, 30-day roll rates have become an important precursor in helping to anticipate future performance for CMBS delinquencies,’ says, Mary MacNeill, Managing Director, Fitch Ratings.
The majority of Fitch Loans of Concern are performing, accounting for 14.8% in multiborrower fixed rate deals and 28.8% in floating rate deals. As the weakening economy causes commercial real estate fundamentals to continue to decline, Loans of Concern and delinquencies are rising.
Fitch Loans of Concern within the fixed-rate 2004 through 2007 vintages are up an average of 5% from June to July as yearend 2008 financial statements evidence declining cash flow trends.
Fitch expects both 30 and 60 day delinquencies to continue to rise in these vintages as loans 30 days delinquent rose by an average of 62 basis points.
For details see Fitch U.S. CMBS VintageView.
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