CMBS Special Servicing Rate Climbs for the First Time in Nearly a Year

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Trepp has published its April 2019 Special Servicing Report that speaks to the first increase in the special servicing rate since July 2018.

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CMBS Special Servicing Rates by Property Type

The special servicing rate increased for the first time in almost a year thanks to $910.2 million in newly transferred loans.

Trepp, LLC, a leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, has released its April 2019 CMBS Special Servicing Report. The full report can be accessed here: https://www.trepp.com/april-2019-cmbs-special-servicing-report.

The Trepp CMBS Special Servicing Rate rose by 11 basis points to 3.53% in April, which is the reading’s first month-over-month increase since July 2018. While special servicing rates for all five major property types climbed last month, the retail sector featured the greatest month-over-month change. Despite April’s increase, the rate has fallen 115 basis points year over year.

“The special servicing rate increased for the first time in almost a year thanks to $910.2 million in newly transferred loans,” said Joe McBride, Trepp’s Director of Research & Applied Data. “Retail properties made up the majority of those transfers, led by the Destiny USA mall in Syracuse, New York. The mall backs a $430 million single-asset CMBS deal that was issued in 2014. Defaults in single-asset CMBS deals are very rare, so we will be keeping our eye on the Destiny mall going forward.”
Special servicing readings for all five major property segments increased last month, but no increase was larger than that of the retail sector. The retail special servicing rate surged 24 basis points to 5.73% in April. Although the lodging segment is still the best performing major property type, it incurred the month’s second-greatest jump, rising nine basis points to 2.25%. Lodging loans in CMBS 1.0 featured a very sharp incline in servicing transfers, as that segment’s reading soared by more than 1,000 basis points.

The percentage of post-crisis, or CMBS 2.0+, debt that was in special servicing last month rose 16 basis points to 1.27%. Retail and multifamily servicing events pushed the overall 2.0+ rate higher, as those property type rates climbed 47 and 16 basis points, respectively, last month. The CMBS 1.0 special servicing rate, which looks at any loans issued before the 2008 financial crisis, surged 167 basis points to 50.05% in April.

For additional details, such as monthly rate changes for all major property types, download the April 2019 CMBS Special Servicing Report: https://www.trepp.com/april-2019-cmbs-special-servicing-report. For daily CMBS commentary, follow @TreppWire on Twitter.

About Trepp
Trepp, LLC, founded in 1979, is the leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets. Trepp provides primary and secondary market participants with the web-based tools and insight they need to increase their operational efficiencies, information transparency, and investment performance. From its offices in New York, San Francisco, and London, Trepp serves its clients with products and services to support trading, research, risk management, surveillance, and portfolio management. Trepp is wholly-owned by Daily Mail and General Trust (DMGT). For more information, visit http://www.Trepp.com.

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Sean Barrie
Trepp
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