Fitch: U.S. CMBS Defeasance Volume Still Strong; Future Pace Uncertain

NEW YORK--()--Defeasance activity for U.S. CMBS remained strong last quarter, though any volatility in interest rates and liquidity could dictate whether the trend keeps pace, according to Fitch Ratings in its latest weekly U.S. CMBS newsletter.

Newly defeased loans in Fitch-rated U.S. CMBS totaled $3.6 billion in 4Q'15, which is lower than the $5.3 billion the same quarter one year earlier. However, the levels are still significant as borrowers continue to take advantage of low interest rates. Overall newly defeased loans totaled $14.2 billion for 2015 compared to nearly $20 billion in 2014.

The 4Q'15 defeasance volume brings the total in Fitch-rated U.S. CMBS deals to $20 billion (5.2% of Fitch's total outstanding rated CMBS universe) as of year-end 2015. The largest share of 4Q'15 defeasances by vintage were as follows:

--2007 ($1.5 billion, 40% of 4Q'15 defeasances);

--2006 ($1.1 billion, 30%);

--2011 ($470 million, 13%); and

--2012 ($415 million, 11%).

By property type, office led the way with $1.3 billion (36% of 4Q'15 defeasances). By MSA, New York (New York-Newark-Jersey City, NY-NJ-PA) led 4Q'15 defeasances with $1.3 billion (35% of 4Q'15 defeasances). Fitch expects 1Q'16 defeasance volume to remain strong. However, overall defeasance volume is likely to decline from prior years given the future trajectory of interest rates and considering new regulatory requirements and the health of the overall U.S. economy.

Additional information is available in Fitch's weekly e-newsletter, 'U.S. CMBS Market Trends', which also contains recent rating actions and an overview of newly released CMBS research, including Fitch presales and Focus reports. The link below enables market participants to sign up to receive future issues of the E-newsletter:

'http://pages.fitchemail.fitchratings.com/CMBSMktOptin/'

Additional information is available at 'www.fitchratings.com'.

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Contacts

Fitch Ratings
Melissa Che
Director
+1-212-612-7862
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004
or
Christopher Bushart
Senior Director
+1-212-908-0606
or
Media Relations:
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Melissa Che
Director
+1-212-612-7862
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004
or
Christopher Bushart
Senior Director
+1-212-908-0606
or
Media Relations:
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com