OREANDA-NEWS. Fitch Ratings says in a new report that EMEA CMBS performance stabilised in 1Q15 as commercial real estate loans past their original maturities have remained flat, at just above 63%, since 4Q14. Similarly, the number of loans in special servicing increased only slightly in 1Q15.

Two loans matured last quarter, neither of which has been repaid to date. DECO 14's Cottbus Shopping Centre entered special servicing while Hercules (Eclipse 2006-4)'s Cannonbridge was granted a short-term extension, to allow the borrower more time to finalise a loan exit. In 2Q15, only three further loans are scheduled to mature and, in Fitch's opinion, are unlikely to repay on a timely basis.

The looming bond maturities from 2016 onwards are keeping the pressure on special servicers to resolve 145 defaulted loans portfolio in a timely manner. Workouts, which in some cases have lasted for five years or more, are coming to an end and are reducing the defaulted loan count. Recent stabilisation/improvement in secondary property markets and increased investor appetite will likely be beneficial for ultimate recoveries and resolution timing.

In 2016, 32 loans with an aggregate balance of EUR5bn are scheduled to mature. This constitutes a sizeable increase from 2015's 23 loans of EUR2.7bn. However, refinancing efforts, property auctions and loan sales will be dominated by the defaulted 140 loans (EUR9.3bn) that matured between 2009 and 2014. With no equity remaining in the majority of cases, Fitch expects losses to widen across property types and jurisdictions.

Once the bulk of legacy loans have been repaid (with or without losses) the Fitch-rated EMEA CMBS portfolio will predominantly consist of long-dated transactions and recent issuance, which are of sounder credit quality. The former are mostly UK transactions, heavily or fully amortising over term and either credit-linked to their sole tenants or secured on multi-let prime assets (shopping centres or offices). The latter were structured to avoid the weaknesses witnessed among CMBS 1.0 and subject to tighter lending criteria, comparable to the performing pre-2006 vintages.

The report, "Commercial Mortgage Market Index EMEA - 1Q15", is available on www.fitchratings.com or by clicking the link above.