Trepp reported that special servicing rate for multifamily commercial mortgage-backed securities (CMBS) loans moved higher for the third month in a row in October, rising another 14 basis points. The overall CMBS special servicing rate on commercial property also continued to rise as the special servicing rate of office loans jumped 136 basis points.
Multifamily CMBS special servicing rates rise
The special servicing rates on CMBS loans on multifamily property rose again in October, although at a lower rate than in last month’s report. The rate hit 6.21 percent, exceeding last month’s 9-year high.
The report found that overall CMBS special servicing rate rose to 9.14 percent, up from 8.79 percent the month before. This rate has now risen for 10 straight months.
The special servicing rate on CMBS loans on industrial properties is again by far the lowest of any commercial property type covered and it was the only rate to move lower this month. It reversed last month’s 11 basis point rise to match August’s rate of 0.39 percent.
The rate on lodging properties climbed 48 basis points to 8.32 percent. It is up 90 basis points in the last 2 months.
The special servicing rate on office properties climbed 136 basis points to 13.94 percent. Two years ago, it had been only 3.72 percent.
The rate for retail properties rose 30 basis points to 11.37 percent.
The history of the overall and multifamily CMBS special servicing rates as reported by Trepp since January 2020 is illustrated in the chart, below.
The full Trepp special servicing rate report can be found here.
Loan loss severity higher
Trepp also recently reported on the volume and severity of loan losses on CMBS loans which were resolved in October, although it does not break down this data by the type of property covered by the loans. The history of this data over the last 25 months is shown in the next chart, which shows the average loss incurred per resolved loan along with the average percentage of a resolved loan’s value that was lost during resolution.
The chart shows that the severity of CMBS loan losses moved higher in October, rising over 7 percentage points to 62.52 percent. However. the average dollar loss per loan fell by nearly half to $4.7 million. The number of loans resolving in October fell from 15 to 10. The total dollar value of the loans that resolved fell to $75.7 million, well below the monthly average of $244.7 million over the last 12 months.
Since monthly loan loss data can be volatile, Trepp also reports on the 12-month trailing average loss severity. This figure eased slightly to 63.25 percent this month, down from 65.97 percent last month. A year ago, it was 54.66 percent. The October loan loss severity report can be found here.
