New York Loans Distort Multifamily CMBS Performance via CoStar Group

Multifamily property loans, along with those for hotels, have shown the best performance rebound over the past 24 months of all commercial real estate property types, according to Fitch Ratings. As the economy has stabilized, the two have been able to mark-to-market more quickly due to shorter term rentals than other property types that have stickier rental streams as a result of longer-term leases.

So why then are these two property types among the worst performing in Fitch Ratings' Loan Delinquency Index?

One answer is for exactly the same reason that they are currently performing better; they marked-to-market earlier on the downside too. And once a loan becomes 60+ days delinquent, its ability to extricate itself becomes difficult as the borrower has less cash flow available to ensure the property remains competitive with its peers.

Some initial analysis Fitch has done shows what multifamily delinquencies look like when the 'rent-stabilized' New York multifamily loans and 'small balance' loans are stripped out.

Read more...New York Loans Distort Multifamily CMBS Performance via CoStar Group