NEW YORK CITY—Although the month-to-month drop in CMBSdelinquencies overall to 5.13% was the smallest in morethan a year at three basis points, securitized hotel loans didconsiderably better than that. The lodging sector saw its rate oflate-pays on CMBS decline by 17 bps from March to 5.18%,Fitch Ratings said last week, with the $90 millionin resolutions outpacing the $50 million in new delinquencies.

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The reduction in the hotel CMBS delinquency rate appreciablynarrowed the gap between the lodging sector and retail. Still thebest-performing sector with just 5.11% of Fitch-rated loans overdueby 60 days or more, retail's delinquency rate declined by only fourbps from March.

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As it was in March, office was in third place; however, officeCMBS delinquency ticked upward between March and April, the onlyone of the five major food groups to do so. Office finished themonth at 5.43%, compared to 5.36% in March.

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Helping to drive an uptick in office CMBS delinquency was thelargest new delinquency in April, the $80-million 1111 Marcus Ave.securitization (JPMMC 2006-FL2). The loan is secured by acondominium interest in an office complex in New Hyde Park, NY,originally scheduled to mature in October 2009 with two one-yearextension options.

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In November 2011, the borrower signed a forbearance agreement,which expired this past October. The loan was transferred back tospecial servicing in September 2013 due to imminent default and theforbearance was subsequently extended to April 9, 2014. However,the loan was reported as being in foreclosure last month, and Fitchsays it's been informed by the special servicer that the borrowerhas agreed to a deed in lieu, which is expected to close thisquarter.

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Conversely, however, office also figured in last month's largestresolution among Fitch-related CMBS loans. The $80.5 millionCentral Parke Pool (WBCMT 2006-C25), an REO asset that was sold fora 61% loss, consisted of 10 office and flex properties and oneretail property in Cincinnati, with occupancies ranging from zeroto 96%.

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Rounding out the five major property types were multifamily,with a six-bps drop from March to 5.97%, and industrial, still theworst-performing property type for CMBS loans although its Aprildelinquency rate of 6.67% was seven bps lower than in March.Industrial had shown the greatest improvement in March, with Fitchreporting a 64-bps decrease in CMBS late-pays from 7.38%.

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As for the relatively modest decline overall in CMBS late-pays,Fitch noted the same absence observed by Treppwhen it issued its own report on April delinquencies earlier thismonth: a lack of large distressed portfolio sales. “The largestmonthly declines over the past year (40 bps or more) came asservicers Orix and CWCapital employed bulk sales to dispose ofassets,” according to Fitch. “The CW bulk sale has recentlyconcluded; none of the servicers currently have assets marketed aspart of a bulk sale.”

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Similarly, Trepp noted a dropoff in volume, period, betweenApril and the month prior. “In February and March, over $4.5billion in loans were resolved,” Trepp said earlier this month. “InApril, that amount was just $850 million. Despite the drop involume, resolved loans and cured loans were able to push thedelinquency rate down.”

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.