NEW YORK CITY—Performance metrics for legacy CMBS are doing justfine. As Trepp reported last week and as FitchRatings notes in its own report, delinquencies for thesesecurities continue to fall.

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However, some new issuance measures are worsening—namely theleverage metrics, according to Fitch Ratings' latest quarterlyindex report.

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It reported that credit enhancement levels for US CMBS rose infirst quarter of 2014, as underlying loan leverage increased.

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Average AAA credit enhancement for Fitch-rated transactions roseby 75 basis points in Q1 from the prior quarter. "Credit protectionfor 'AAA' CMBS is now 150 bps higher than one year ago," accordingto Fitch Ratings' Managing Director MaryMacNeill.

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Average BBB– credit enhancement increased by 62.5 bpsquarter-over-quarter and is 75 bps higher than the firstquarter.

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In addition, the percentage of loans with Fitch-stressedloan-to-value ratios above 100% rose by nine percentage points inQ1 from the prior quarter to 65%. The percentage of loans having orallowing subordinate debt also increased, up by over fourpercentage points in Q1.

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Other new issuance metrics, however, remained largely unchanged.The combined percentage of full and partial interest only loans wasflat, while weighted average mortgage rates fell by 10 basis pointsfrom the prior quarter.

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From a borrower perspective, of course, this trend is hardly aconcern. The CMBS market is proving to be marvelously robust andflexible for borrowers with even unusually-structured deals able tosecure financing.

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Last month, to give one example, JK Equitiesclosed on a $21.5 million CMBS loan fromNatixis Global Asset Management to convertBaltimore's Equitable Building into residentialunits. JK Equities is spending $32 million to convert thenine-story property into 180 market-rate housing units.Eastern Union Funding's Ira Zlotowitz andMeir Kessner helped secure the loan at a 4.91%annual interest rate on a three-year term.

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As it announced the funding, Eastern Union reported increasedactivity in Wall Street lending in general, especially for complexdeals like the Equitable Building transaction—which, it noted, istechnically a non-recourse construction rehab loan with anadditional level of mezzanine financing.

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