Fitch Ratings’ fixed-rate US CMBS loan default rate ticked down to 13.2% in Q3 from 13.3% in Q2 due to strong new issuance and fewer new defaults.
Fitch rated conduit issuance in Q3 was a healthy $13.6bn, helping to push the rate down.
Though the average size of the newly defaulted loans nearly doubled to $20.5m from Q2, with the nine of the largest loans making up about 73% of the total by balance, there were far fewer of them: just 38 loans totaling $779.1m newly defaulted, compared with 70 loans totaling $797.4m in Q2.
Office properties were the largest contributor with 15 loans comprising 55.7% of new defaults, followed by retail properties with 12 loans at 31.8%, both of which defaulted primarily due to struggling occupancy levels and declining rents.
The largest loan, a $163.8m on One and Two Jericho Plaza, Jericho, New York, securitized in CSMC 2007-C5 and secured by two Class A office buildings totaling 638,216 sf, experienced “significant tenant rollover as well as increased expenses” and was ultimately disposed — prior to its May 2017 maturity — in October 2015 remittance via a note sale, resulting in a realized trust loss of $73.6m.
The second largest was the $108.5m loan on the 396,840 sq ft The Mall at Stonecrest in Lithonia, Georgia, the largest loan of four in BACM 2005-1. The loan is now current after it was modified and the original maturity date of October 2014 was extended until October 2016.
The next three largest loan were the $89.8m Vista Ridge Mall in Lewisville, Texas, the $52.5m Fifth Third Center in Columbus, Ohio and the $48.8m loan on Maxtor Campus in Longmont, Colorado.