With another half-year of performance in the books, current data is pointing to a continued slow and uneven improvement for U.S. commercial real estate according to Fitch Ratings in its latest U.S. Structured Finance Snapshot.
Performance across CMBS property types has been dependent on the property type in question. ‘Office properties will likely continue to see net operating income declines unless the property is in a core market such as New York,’ said Managing Director and CMBS group head Huxley Somerville. Multifamily and hotels, in contrast, will likely see average net operating income close in on historic peaks as 2012 comes to a close.
Fitch expects loan delinquencies to remain relatively flat for the remainder of 2012, with only office properties expected to climb. The same holds true for defaults. Loans on office properties contributed 47% of all defaults for the first six months of this year.
Another asset type that Fitch has been and will be paying particular attention to is retail. Recent consumer spending declines make retail properties a continued focal point. This has been especially true with respect to new deals where retail loans have been making up a large proportion of the newly securitized collateral.
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