05/16/2013 | by Carisa Chappell
Commercial mortgage-backed securities (CMBS) delinquencies in the United States fell in April to their lowest level in five years, according to the latest data from ratings agency Fitch Ratings.

Late payments for CMBS declined 19 basis points in April, going down to 7.44 percent from 7.63 percent in March, according to Fitch Ratings. Furthermore, the total amount of new delinquencies reported in April, $747 million, dropped below the $1 billion mark for the first time since February 2009. 

The Fitch Ratings report noted that the last time new delinquencies were lower was in October 2008, when they came in at $458 million. At that time, the overall late payment rate for CMBS was 0.51 percent. The firm said it expects that the current delinquency numbers for CMBS will continue to move downward as real estate conditions improve.

“With many large assets having now made their way through the foreclosure process, CMBS delinquencies stand to drop further, sometimes sharply, as those assets are sold,” said Mary MacNeil, managing director at Fitch Ratings. 

The apartment sector saw its delinquency rate fall the most of any individual sector, declining from 8.91 percent in March to 8.38 percent in April. The office sector’s delinquency rate dropped from 8.50 percent in March to 8.39 percent in April. 

On the other hand, Fitch found that CMBS delinquencies rose to 9.82 percent for the industrial sector in April, up from 9.41 percent in the previous month. Hotel sector delinquencies also increased, up from 7.71 percent in March to 8.01 percent in April. Additionally, retail delinquencies moved up slightly, climbing to 7.10 percent in April from 7.09 percent in March. 

 “The volume of CMBS loan resolutions is likely to remain strong, with the share of real estate owned assets (REOs) at an all-time high,” MacNeil said.

MacNeil said the share of real estate owned assets, which include properties that go back to the mortgage company after an unsuccessful foreclosure auction, represents 45 percent of the total outstanding delinquencies. The share of REOs is even higher, 57 percent, for larger loans of more than $100 million.