U.S. CMBS loan defaults edged lower in 2022 as post-pandemic stabilization of asset performance and property cash flows continued, according to Fitch Ratings. However, the rating agency also reported that the pace of defaults accelerated in 2022’s second half and that 2023 will bring more of them.
Total annual and cumulative default rates for 2022 were 0.3% and 17.9%, respectively, down from 0.4% and 18% in 2021 – marking two consecutive years of declines after peaking at 3.3% & 18%.2 % in 2020 due to pandemic-related disruptions . The second half saw a “significant increase”in maturity defaults as interest rates rose , according to Fitch’s report .
Fitch anticipates an overall increasing trend for default rate s reversing this year with higher volumes expected during their term leading into special servicing along with an increase in maturity defaults due to higher interest rates , weaker commercial real estate fundamentals & tightening credit conditions . Additionally , CMBS issuance volume is likely be lower given banking sector volatility & elevated interest rate s .
Office loans had the greatest rise among all Fitch rated CMBS accounting for 49 % or $1 billion 58 million total defaulted amount last year alone making it most impacted category amongst others
