Over the past 18 months or so I have discussed the commercial real estate market and how it would be the next ‘big problem’.
Today we learn the latest commercial real estate delinquency statistics and it continues to look bad.
According to Fitch Ratings the delinquency rate in commercial mortgage backed securities (CMBS) has risen to 8.14% in June.
Fitch states that the number of distressed properties continues to grow.
‘The number of distressed properties continues to grow,’ said Managing Director Mary MacNeill. ‘If borrowers are unable to access capital for leasing costs or are unable to restructure their loans to a leverage level commensurate with sustainable property values, they may stop subsidizing debt service payments.’ (Reuters)
June delinquency rates by property type, as compared with May, are as follows:
- Hotel: to 18.62% from 18.63%;
- Multifamily: to 13.82% from 13.65%;
- Retail: to 6.19% from 6.03%;
- Industrial: to 5.48% from 5.07%;
- Office: to 4.84% from 4.59%.
These statistics suggests that the economic growth that is being touted by Washington is not what they say it is. I continue to expect further declines in both residential and commercial real estate markets for at least another year.
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