CMBS defaults continue to rise to start the year

Commercial mortgage-backed securities experienced a heightened level of defaults during the first quarter.

Commercial real estate companies may have experienced some difficulty as the year began, as defaults of commercial mortgage-backed securities rose during the first quarter, according to Fitch Ratings.

The total default rate for the quarter was 12.96 percent, slightly above the fourth quarter's rate of 12.71 percent. New loans that reached default during the first quarter totaled $1.7 billion, according to the report. The building type with the largest number of defaults during that period was offices, which totaled 49 percent of new defaults. The second-highest level was seen in retail properties, as 29 percent of defaults came from that sector.

Despite the slight increase, Fitch noted that defaults seen during 2012 should be relatively similar to 2011. In 2011, the total default level was $13.7 billion with 950 loans noted in default. Those figures were much improved from 2010, when 1,500 loans defaulted and totaled $22.1 billion.

The 2012 statistics from Fitch did not include those loans that were not refinanced when noted to be mature. If those were included, the total ratio of defaults would have been 15.42 percent.

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