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According to Fitch Ratings CMBS Delinquency Index Results 13 Hotel Loans
Totaling $596 million Defaulted Including:
$190 million Pointe South Mountain Resort in Phoenix, AZ,
$117 million Loews Lake Las Vegas in Las Vegas, NV, and
$100 million Dream Hotel in New York, NY.

Large Hotel & Retail Defaults Drive U.S. CMBS Delinquencies 48bps Higher

NEW YORK - July 13, 2009 - Defaults on five loans of $100 million or more contributed to a record $2.2 billion net increase in U.S. CMBS (Commercial mortgage-backed securities) delinquencies in June, pushing late-pays up 48 basis points (bps) to 2.55%, according to the latest U.S. CMBS delinquency index results from Fitch Ratings.

The largest defaults included three loans collateralized by hotel properties that defaulted during their term and two non-performing matured loans backed by regional malls.

'Hotel performance has continued its expected sizable decline, with revenue per available room levels down 20% to date, and cash flows expected to decline by at least 35% from peak levels,' said Susan Merrick, Managing Director and U.S. CMBS Group Head. 'With no immediate revival of demand in sight and recent-vintage hotel loans unlikely to meet projected performance levels, loan sponsors are increasingly depleting reserve accounts or are being forced to come out of pocket to service debt shortfalls, each of which are a precursor to potential future default.'

Last month, 13 hotel loans totaling $596 million defaulted. These included the 

  • $190 million Pointe South Mountain Resort in Phoenix, AZ, 
  • $117 million Loews Lake Las Vegas in Las Vegas, NV, 
  • $100 million Dream Hotel located in New York, NY.
Fitch expects hotel delinquencies to continue to grow, with an additional $608 million of Fitch-rated hotel loans 30 days past due as of June 30. Included in this group were three notes totaling $293.8 million which correspond to portfolios of Red Roof Inn properties, which Fitch expects will move into the Index next month. Hotels will continue to be the most volatile property type, due to their heavy reliance on business and personal discretionary income as well as the daily resetting of rates.

The two largest retail defaults in June, the $207.2 million Woodbridge Center loan and $164.5 million Jordan Creek loan, are sponsored by General Growth Properties (GGP). Though performance at each of the properties was strong throughout the term, each borrower's failure to repay the balloon amount upon maturity resulted in their respective defaults, which will not be resolved until further details emerge from the bankruptcy ruling. According to the cash collateral agreement approved in bankruptcy court, GGP is required to remit interest payments on all of the loans included in the filing. As a result, most GGP-sponsored loans will not move into the Loan Delinquency Index until a balloon default occurs at maturity. Four additional Fitch-rated loans included in the bankruptcy, totaling approximately $227 million, mature in 2009. As of the last reading, GGP-sponsored loans accounted for 12 bps in the Index.

As of June 30, 2009, the total balance of delinquent loans secured by retail properties has surpassed that of multifamily-backed loans, at $3.95 billion and $3.32 billion, respectively. Delinquency volumes for office, hotel, and industrial loans stood at $1.94 billion, $1.58 billion, and $456.5 million, respectively. When ranked by delinquencies within their individual property types, multifamily led at 4.79%, followed by hotel at 3.04%, retail at 2.84%, industrial at 1.83%, and office with only 1.28%.

Fitch's delinquency index includes 1,730 loans totaling $12.0 billion which are at least 60 days delinquent or in foreclosure, out of the Fitch rated universe of approximately 42,000 loans comprising $471 billion. The Index excludes Fitch-rated loans that are 30 to 59 days delinquent, which currently total $5.7 billion.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.


Fitch Ratings
Susan Merrick, 212-908-0725

Sandro Scenga, 212-908-0278 (New York)

Also See: The Former Pointe South Mountain Resort in Phoenix Now the Arizona Grand; Sam Grossman, One of the Few Owner Operators of Big Resorts, Bought the 21-yearold Resort for $206 million / November 2007
Grossman Company Properties Acquires the 640-suite Pointe South Mountain Resort in Phoenix; Plans $50 million Renovation / July 2006



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