Last month, 13 hotel loans totaling $596 million defaulted. These included the $190-million Pointe South Mountain Resort in Phoenix, the $117-million Loews Lake Las Vegas in Las Vegas, and the $100-million Dream Hotel located in New York City.

According to a release, Fitch expects hotel delinquencies to continue to grow, with an additional $608 million of Fitch-rated hotel loans 30 days past due as of June 30. Included in this group were three notes totaling $293.8 million from portfolios of Red Roof Inn properties, which Fitch expects will move into its loan delinquency index next month.

"Hotel performance has continued its expected sizable decline, with revenue per available room levels down 20% to date, and cash flows expected to decline by at least 35% from peak levels," says Susan Merrick, managing director and US CMBS group head, in a release. She adds that with demand expected to remain slack for the foreseeable future, "loan sponsors are increasingly depleting reserve accounts or are being forced to come out of pocket to service debt shortfalls, each of which are a precursor to potential future default."

GGP is the sponsor of the two largest retail defaults in June: the $207.2-million loan on Woodbridge Center in Woodbridge, NJ and the $164.5-million loan on Jordan Creek in West Des Moines, IA. Fitch notes that although each property is a strong performer, the borrowers failed to repay the balloon amount upon maturity, leading to default. Most GGP-sponsored loans will not move into the delinquency index until a balloon default occurs at maturity, because GGP is required to remit interest payments on all of the loans included in its bankruptcy filing, Fitch says.

Four additional Fitch-rated loans included in the bankruptcy, totaling approximately $227 million, will mature this year. GGP-sponsored loans accounted for 12 bps in the most recent index, according to Fitch.

As of June 30, delinquent retail loans secured reached $3.95 billion, topping the multifamily total of $3.32 billion, according to Fitch. Delinquency volumes for office, hotel, and industrial loans stood at $1.94 billion, $1.58 billion and $456.5 million, respectively. When ranked by delinquencies within their individual property types, multifamily topped the list at 4.79%, followed by hotel at 3.04%, retail at 2.84%, industrial at 1.83% and office with only 1.28%.

Instant Insights /

Fitch: Hotel, Retail Defaults Spike CMBS Delinquencies

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