Fitch Ratings: U.S. CMBS Delinquency Rate Declines for Third Consecutive Month at Start of 2021

(The following statement was released by the rating agency)

Fitch Ratings-New York-05 February 2021: Fitch Ratings' U.S. CMBS delinquency rate fell 14 bps to 4.55% in January 2021 from 4.69% at YE 2020 due to slowing pace of new delinquencies and continued strong new issuance volume. New delinquencies decreased to $1.3 billion in January from $2.0 billion in December. Fitch-rated new issuance volume of $6.1 billion (seven transactions) in December contributed to a higher overall index denominator. New delinquencies were predominantly hotel (28 loans; $564 million), retail (18 loans; $268 million) and office (seven loans; $252 million), with approximately 16% ($217 million) having been previously granted relief. Resolution volume, which remained consistent from the prior month, totaled $1.8 billion. Over half ($1.0 billion) were loans previously 60+ days delinquent now classified as current, of which $344 million were granted relief. Since the start of the pandemic, 734 loans ($22.6 billion), or 4.6% by balance of the Fitch-rated U.S. CMBS universe, have received relief. The rate of 30-day delinquencies rolling to 60 days fell to 29% from December to January, compared with 42% from November to December. Total 30-day delinquencies were $2.9 billion in January, compared with $3.7 billion in December. Special servicing volume in January inched higher to $29.9 billion, or 6% of the Fitch-rated U.S. CMBS universe, from $29.8 billion in December. Over this period, $820 million (30 loans) were new transfers and $222 million (15 loans) were removed from special servicing. Approximately 73% of the special servicing volume ($21.9 billion) were at least 60 days delinquent in January, down slightly from 74% ($22.1 billion) in December. With the exception of mixed use, all major property types reported lower delinquency rates from the prior month. --Hotel: 17.88% (18.38% at YE 2020, 1.41% at YE 2019); --Retail*: 10.52% (10.98%, 3.79%); --Mixed Use: 4.21% (4.06%, 0.83%); --Office: 1.67% (1.70%, 1.59%); --Multifamily**: 0.57% (0.58%, 0.44%); --Industrial: 0.38% (0.42%, 0.39%); --Other: 1.43% (1.39%, 0.64%). *Regional Malls: 18.83% (19.97%, 4.10%). **Student Housing: 5.35% (5.05%, 3.98%). The largest resolution, the $357 million Santa Monica Hotel Portfolio loan (MSC 2018-SUN), which is secured by two full-service, beachfront hotels in Santa Monica, CA (Shutters on the Beach and Casa Del Mar), was brought current in January 2021. The special servicer and sponsors, Edward and Thomas Slatkin, executed an agreement in December to cure the existing defaults and to modify and reinstate the loan. The borrower exercised the first of five one-year extension options through July 2021. The largest new delinquency, the $85.6 million Square One Mall loan (COMM 2012-LC4), which is secured by a regional mall operated by Simon Property Group in Saugus, MA, became 60 days delinquent for the second time in January 2021. The loan transferred to special servicing in July 2020 for imminent default due to the pandemic and first became 60 days delinquent in October 2020. Mall occupancy dropped to 66% after the non-collateral Sears closed in September 2020. By transaction type, delinquency rates were as follows: --Conduit: 6.81% (953 loans, $22.2 billion); from 6.91% at YE 2020; --Freddie Mac: 0.09% (seven loans, $108 million); 0.08%; --Large Loan Floaters: 3.76% (four loans, $118 million); 3.75%; --Single Family Rental: 2.37% (34 loans, $65 million); 2.71%; --Small Balance: 3.10% (four loans, $2 million); 3.10%; --Single Asset/Single Borrower: 0.00% (no loans); 0.88%. Fitch's delinquency index includes 1,002 loans ($22.5 billion) that are currently at least 60 days delinquent, in foreclosure, REO or considered nonperforming matured. The outstanding Fitch-rated U.S. CMBS universe includes 25,484 loans ($495 billion), of which $32 billion was defeased in January 2021. The index excludes 30-day delinquencies and wireless tower, outdoor advertising and Canadian transactions. Newly issued CMBS transactions are seasoned for one month before inclusion in the rated universe. Contact: Melissa Che Senior Director, CMBS +1-212-612-7862 Fitch Ratings, Inc. 300 West 57th Street New York, NY 10019 Stephanie Duski Associate Director, CMBS +1-646-582-4820

Media Relations: Sandro Scenga, New York, Tel: +1 212 908 0278, Email: sandro.scenga@thefitchgroup.com

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